UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549

FORM 20-F

(Mark One)

[   ]  REGISTRATION STATEMENT PURSUANT TO SECTION 12(b) OR (g) OF THE SECURITIES EXCHANGE ACT OF 1934

OR

[   ]  ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended ________

OR

[ X ]   TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from June 1, 2012, to June 30, 2013

OR

[   ] SHELL COMPANY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

Date of event requiring this shell company report ________

Commission file number: 000-26296

Petaquilla Minerals Ltd.
(Exact name of Registrant as specified in its charter)

Not Applicable
(Translation of Registrant's name into English)

Province of British Columbia, Canada
(Jurisdiction of incorporation or organization)

Suite 1230, 777 Hornby Street, Vancouver, British Columbia, Canada V6Z 1S4
(Address of principal executive offices)

Mr. Ezequiel Sirotinsky, Chief Financial Officer
Telephone (604) 694-0021, facsimile (604) 694-0063, email: esirotinsky@petaquilla.com
Suite 1230, 777 Hornby Street, Vancouver, British Columbia, Canada V6Z 1S4
(Name, Telephone, E-mail and/or Facsimile number and Address of Company Contact Person)

Securities registered or to be registered pursuant to Section 12(b) of the Act.

None
Not applicable

Securities registered or to be registered pursuant to Section 12(g) of the Act.

Common Shares without Par Value
(Title of Class)

Securities for which there is a reporting obligation pursuant to Section 15(d) of the Act.

Not Applicable
(Title of Class)

Indicate the number of outstanding shares of each of the issuer’s classes of capital or common stock as of the close of the period covered by the annual report.

222,330,161 common shares, without par value, as at June 30, 2013

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.
[   ] Yes [ X ] No

If this report is an annual or transition report, indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934.
[   ] Yes [ X ] No

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
[ X ] Yes [   ] No

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).
[ X ] Yes [   ] No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer.

See definition of “accelerated filer and large accelerated filer” in Rule 12b-2 of the Exchange Act. (Check one):

Indicate by check mark which basis of accounting the registrant has used to prepare the financial statements included in this filing:

If “Other” has been checked in response to the previous question, indicate by check mark which financial statement item the registrant has elected to follow.
[   ] Item 17 [   ] Item 18

If this is an annual report, indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
[   ] Yes [ X ] No 

CAUTIONARY NOTE REGARDING RESOURCE AND RESERVE ESTIMATES

The terms “mineral reserve”, “proven mineral reserve” and “probable mineral reserve” are Canadian mining terms as defined in accordance with Canadian National Instrument 43-101 – Standards of Disclosure for Mineral Projects (“NI 43-101”) and the Canadian Institute of Mining, Metallurgy and Petroleum (“CIM”) - CIM Definition Standards For Mineral Resources and Mineral Reserves , adopted by the CIM Council, as amended. These definitions differ from the definitions in the United States Securities and Exchange Commission (“SEC”) Industry Guide 7 under the United States Securities Act of 1993, as amended (the “Securities Act”). Under SEC Industry Guide 7 standards, a “final” or “bankable” feasibility study is required to report reserves, the three-year historical average price is used in any reserve or cash flow analysis to designate reserves and the primary environmental analysis or report must be filed with the appropriate governmental authority.

In addition, the terms “mineral resource”, “measured mineral resource”, “indicated mineral resource” and “inferred mineral resource” are defined in and required to be disclosed by NI 43-101; however, these terms are not defined terms under SEC Industry Guide 7 and are normally not permitted to be used in reports and registration statements filed with the SEC. Investors are cautioned not to assume that any part or all of mineral deposits in these categories will ever be converted into reserves. “Inferred mineral resources” have a great amount of uncertainty as to their existence and great uncertainty as to their economic and legal feasibility. It cannot be assumed that all or any part of an inferred mineral resource will ever be upgraded to a higher category. Under Canadian rules, estimates of inferred mineral resources may not form the basis of feasibility or pre-feasibility studies, except in rare cases. Investors are cautioned not to assume that all or any part of an inferred mineral resource exists or is economically or legally mineable. Disclosure of “contained ounces” in a resource is permitted disclosure under Canadian regulations; however, the SEC normally only permits issuers to report mineralization that does not constitute “reserves” by SEC Industry Guide 7 standards as in place tonnage and grade without reference to unit measures.

Accordingly, information contained in this Transition Report on Form 20-F contains descriptions of our mineral deposits that may not be comparable to similar information made public by U.S. companies subject to the reporting and disclosure requirements under the United States federal securities laws and the rules and regulations thereunder.

CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING INFORMATION

This Transition Report on Form 20-F contains forward-looking information and forward-looking statements as defined in applicable securities laws. These statements relate to future events or our future performance. All statements other than statements of historical fact are forward-looking statements.

Forward-looking statements include, but are not limited to, statements with respect to the future price of gold, silver and other minerals, the estimation of mineral reserves and resources, the realization of mineral reserve estimates, the timing and amount of estimated future production, costs of production, capital expenditures, costs and timing of the development of new deposits, success of exploration activities, permitting time lines, currency exchange rate fluctuations, requirements for additional capital, government regulation of mining operations, fiscal 2014 strategies and plans, planned recovery rates, estimated production from on/off leach operations, and any potential spin out of our infrastructure division.

Generally, these forward-looking statements can be identified by the use of forward-looking terminology such as “plans”, “expects” or “does not expect”, “is expected”, “budget”, “scheduled”, “estimates”, “forecasts”, “intends”, “anticipates” or “does not anticipate” or “believes”, or variations of such words and phrases or state that certain actions, events or results “may”, “could”, “would”, “might” or “will be taken”, “occur” or “be achieved”.

Forward-looking statements are subject to known and unknown risks, uncertainties and other factors that may cause our actual results, level of activity, performance or achievements to be materially different from those expressed or implied by such forward-looking statements, including but not limited to: risks related to international operations; risks related to joint venture operations; actual results of current exploration activities; conclusions of economic

evaluations; changes in project parameters as plans continue to be refined; future prices of gold and silver; possible variations in ore reserves, grade or recovery rates; failure of plant, equipment or processes to operate as anticipated; accidents, labor disputes and other risks of the mining industry; delays in obtaining governmental approvals or financing or in the completion of development or construction activities, as well as those factors discussed in the section entitled “Risk Factors” in this Transition Report on Form 20-F. Although we have attempted to identify important factors that could cause actual results to differ materially from those contained in forward-looking statements, there may be other factors that cause results not to be as anticipated, estimated or intended. There can be no assurance that such statements will prove to be accurate, as actual results and future events could differ materially from those anticipated in such statements. Accordingly, readers should not place undue reliance on forward-looking statements.

Statements in this Transition Report on Form 20-F regarding expected completion dates of feasibility studies, anticipated mining or metal production operations, projected quantities of future metal production and anticipated production rates, operating efficiencies, costs and expenditures are forward-looking statements. Actual results could differ materially depending upon the availability of materials, equipment, required permits or approvals and financing, the occurrence of unusual weather or operating conditions, the accuracy of reserve estimates, lower than expected ore grades or the failure of equipment or processes to operate in accordance with specifications. Additional information about these and other assumptions, risks and uncertainties that may affect our future financial performance are set out in Item 3.D. – Key Information – Risk Factors .

Forward-looking statements in this Transition Report on Form 20-F are as of October 31, 2013. We do not undertake to update any forward-looking statements that are incorporated by reference herein, except in accordance with applicable securities laws.

CURRENCY PRESENTATION

This Transition Report on Form 20-F contains references to United States dollars and Canadian dollars. Unless otherwise indicated, all dollar amounts referred to herein are expressed in United States dollars and all financial information presented has been prepared in accordance with International Financial Reporting Standards (“IFRS”) as issued by the International Accounting Standards Board (“IASB”). Canadian dollars are referred to as “CAD$”.

EXPLANATORY NOTE

On August 19, 2013, Petaquilla Minerals Ltd. announced a change to its year-end from May 31 to June 30, pursuant to Part 4.8, Change in Year-End , of National Instrument 51-102, Continuous Disclosure Obligations . As a result, and as accepted by its home-country regulator, the 2013 fiscal year of Petaquilla Minerals Ltd. covered the thirteen month period June 1, 2012, to June 1, 2013. Pursuant to Part 6250.2 of Rule 15d-10(g) and 13a-10(g) of the Securities Exchange Act of 1934, as amended, Petaquilla Minerals Ltd. is required to file this transition report on Form 20-F for the thirteen month transition period from June 1, 2012, to June 30, 2013, with audited consolidated financial statements for the thirteen month period ended June 30, 2013, unaudited financial statements for the twelve month period ended May 31, 2013, and one month period ended June 30, 2013. Thereafter, each subsequent fiscal year will be subject to an annual report on Form 20-F.

INTRODUCTION

Petaquilla Minerals Ltd. is organized under the British Columbia Business Corporations Act. As used in this Transition Report on Form 20-F (the “Transition Report”), the terms “Petaquilla”, “we”, “us” and “our” refer to Petaquilla Minerals Ltd. and our subsidiaries unless otherwise indicated or if the context otherwise requires.

Our principal corporate office is located at Suite 1230, 777 Hornby Street, Vancouver, British Columbia, Canada V6Z 1S4. Our telephone number is 604-694-0021.

We file reports and other information with the SEC located at 100 F Street NE, Washington, D.C. 20549; you may obtain copies of our filings with the SEC by accessing its Electronic Data Gathering Analysis and Retrieval (“EDGAR”) system located at www.sec.gov. Further, we file reports under Canadian regulatory requirements on the System for Electronic Document Analysis and Retrieval (“SEDAR”) of the Canadian Securities Administrators; you may access our reports filed on SEDAR by accessing the following website: www.sedar.com.

The information set forth in this Transition Report is as at October 31, 2013, unless an earlier or later date is indicated.

tables should be ready in conjunction with Item 5 – Operating and Financial Review and Prospects , and the consolidated financial statements included in Item 17 . Results for the periods presented are not necessarily indicative of results for future periods.

This Form 20-F is being filed as an annual report under Exchange Act, and as such, there is no requirement to provide information under this item.

This Form 20-F is being filed as an annual report under Exchange Act, and as such, there is no requirement to provide information under this item.

The following is a brief discussion of those distinctive or special characteristics of our operations and industry, which may have a material impact on, or constitute risk factors in respect of, our financial performance. However, there may be additional risks unknown to us and other risks, currently believed to be immaterial, that could turn out

to be material. These risks, either individually or simultaneously, could significantly affect our business and financial results.

We operate in a dynamic and rapidly changing environment that involves numerous risks and uncertainties. Investors should carefully consider the risks described below before investing in our securities. The occurrence of any of the following events could harm us. If these events occur, the trading price of our common shares could decline, and investors may lose part or even all of their investment.

Mining operations and projects are vulnerable to supply chain disruptions and our operations and development projects could be adversely affected by shortages of, as well as lead times to deliver, strategic spares, critical consumables, mining equipment or metallurgical plant equipment.

Our operations and development projects could be adversely affected by shortages of, as well as lead times to deliver, strategic spares, critical consumables and processing equipment. In the past, we and other gold mining companies have experienced shortages in critical consumables, particularly as production capacity in the global mining industry has expanded in response to increased demand for commodities, and we have experienced increased delivery times for these items. These shortages have also resulted in unanticipated increases in the price of certain of these items. Shortages of strategic spares, critical consumables or mining equipment, which could occur in the future, could result in production delays and production shortfalls, and increases in prices result in an increase in both operating costs and the capital expenditure to maintain and develop mining operations. We and other gold mining companies, individually, have limited influence over manufacturers and suppliers of these items. In certain cases there are only limited suppliers for certain strategic spares, critical consumables and processing equipment and they command superior bargaining power relative to us, or we could at times face limited supply or increased lead time in the delivery of such items. If we experience shortages, or increased lead times in delivery of strategic spares, critical consumables or processing equipment our results of operations and our financial condition could be adversely affected.

We face uncertainty and risks in our exploration and project evaluation activities.

Exploration activities are speculative in nature and project evaluation activities necessary to determine whether a viable mining operation exists or can be developed are often unproductive. These activities also often require substantial expenditure to establish the presence, and to quantify the extent and grades (metal content), of mineralized material through exploration drilling. Once mineralization is discovered it can take several years to determine whether adequate ore reserves exist. During this time, the economic feasibility of production may change owing to fluctuations in factors that affect revenue, as well as cash and other operating costs, including:

• future metal and other commodity prices;

• anticipated tonnage, grades and metallurgical characteristics of the ore to be mined and processed;

• anticipated recovery rates of gold from the ore; and

• anticipated capital expenditure and cash operating costs.

These estimates depend upon the data available and the assumptions made at the time the relevant estimate is made. Resource estimates are not precise calculations and depend on the interpretation of limited information on the location, shape and continuity of the occurrence and on the available sampling results. Further exploration and studies can result in new data becoming available that may change previous resource estimates which will impact upon both the technical and economic viability of production of the relevant mining project. Changes in the forecast prices of commodities, exchange rates, production costs or recovery rates may change the economic status of resources resulting in revisions to previous resource estimates. These revisions could impact depreciation and amortization rates, asset-carrying values provisions for closedown, restoration and environmental clean-up costs. These estimates depend upon the data available and the assumptions made at the time the relevant estimate is made.

We undertake revisions to our resource estimates based upon actual exploration and production results, new information on geology and fluctuations in production, operating and other costs, which could adversely affect the life-of-mine plans and consequently the total value of our mining asset base. Resource restatements could negatively affect our results, financial condition and prospects, as well as our reputation. The increased demand for gold and other commodities, combined with a declining rate of discovery, has resulted in existing reserves being depleted at an accelerated rate in recent years. We, therefore, face intense competition for the acquisition of attractive mining properties.

From time to time, we evaluate the acquisition of exploration properties and operating mines, either as stand-alone assets or as part of companies. Our decisions to acquire these properties have historically been based on a variety of factors including estimates of and assumptions regarding the extent of resources, cash and other operating costs, gold prices and projected economic returns and evaluations of existing or potential liabilities associated with the relevant property and our operations and how these factors may change in the future. All of these factors are uncertain and could have an impact upon revenue, cash and other operating issues, as well as the uncertainties related to the process used to estimate resources.

As a result of these uncertainties, the exploration programs and acquisitions we engage in may not result in the expansion or replacement of current production with new resources or operations. Our operating results and financial condition are directly related to the success of our exploration and acquisition efforts and our ability to replace or increase existing resources. If we are not able to maintain or increase our resources, our results of operations and our financial condition and prospects could be adversely affected.

We face many risks related to the development of our mining projects that may adversely affect our results of operations and profitability.

The profitability of mining companies depends, in part, on the actual costs of developing and operating mines, which may differ significantly from estimates determined at the time a relevant mining project was approved. The development of mining projects may also be subject to unexpected problems and delays that could increase the cost of development and the ultimate operating cost of the relevant project. Our decision to develop a mineral property is based on estimates made as to the expected or anticipated project economic returns. These estimates are based on assumptions regarding:

• future gold prices;

• anticipated tonnage, grades and metallurgical characteristics of ore to be mined and processed;

• anticipated recovery rates of gold extracted from the ore; and

• anticipated capital expenditures and cash operating costs.

Actual cash operating costs, production and economic returns may differ significantly from those anticipated by such estimates.

There are a number of uncertainties inherent in the development and construction of an extension to an existing mine, or in the development and construction of any new mine. In addition to those discussed above, these uncertainties include the:

• timing and cost of the construction of mining and processing facilities, which can be considerable;

• availability and cost of skilled labor, power, water and transportation facilities;

• need to obtain necessary environmental and other governmental permits and the time to obtain such permits; and

• availability of funds to finance construction and development activities.

New mining operations could experience unexpected problems and delays during development, construction and mine start-up. In addition, delays in the commencement of mineral production could occur. Finally, operating cost and capital expenditure estimates could fluctuate considerably as a result of changes in the prices of commodities consumed in the construction and operation of mining projects. Accordingly, our future development activities may not result in the expansion or replacement of current production with new production, or one or more new production sites or facilities may be less profitable than currently anticipated or may not be profitable at all. Our operating results and financial conditions are directly related to the success of our project developments. A failure in our ability to develop and operate mining projects in accordance with, or in excess of, expectations could negatively affect our results of operations and our financial condition and prospects.

We may require additional funding in order to continue our operations.

We have been producing since January 8, 2010, when we achieved commercial production at our Molejon gold property. Considering our increase in cash margin, our improvements in throughput and production capacity at our Molejon gold processing plant, the risk of our requiring additional funding in order to continue our operations

has reduced. Regardless, different sources of funding, depending on market conditions and the appetite of investors to increase their participation in our company’s business or other projects, may become available and could be considered. However, there can be no assurance that funding from these sources will be sufficient in the future to satisfy our operational requirements, debt repayments and cash commitments. This is dependent on market expectations and on our performance, production and results.

Our consolidated financial statements are prepared on a going concern basis.

Our audited consolidated financial statements for the thirteen months ended June 30, 2013, have been prepared on a going concern basis, which assumes that we will be able to realize our assets and discharge our liabilities in the normal course of business for the foreseeable future. As of June 30, 2013, we had an accumulated deficit of $128,020,760 (2012 - $123,419,069) and a working capital deficiency of $85,608,791 (2012 - $41,775,106).

Since previously noted as a subsequent event to our filing of our 2013 fiscal year second quarter consolidated financial statements and corresponding Management’s Discussion and Analysis, which disclosed a shortfall of ounces delivered to Deutsche Bank for the month of December 2012, defined as a default under the terms of the Forward Gold and Silver Agreements and, by consequence, the Convertible Loan Agreement, we have been progressively remediating this default situation, by delivering additional metal or making additional cash payments to Deutsche Bank. Full settlement of these overdue deliveries was completed by a cash payment to Deutsche Bank, on September 13, 2013, for all ounces due up to August 31, 2013. Aside from these recently settled delivery defaults, we have been notified by Deutsche Bank of certain other conditions of default, non-financially related, and Deutsche Bank has consequently reserved its rights under the Forward Gold and Silver Agreement and Convertible Loan Agreement until full remediation by us of such conditions of default. Our management and Deutsche Bank have been jointly working on the required remediation actions and our management expects that full compliance with the covenants of the subject agreements should be achieved during our second quarter of our 2014 fiscal year and, therefore, does not expect that Deutsche Bank will call for an early repayment of its open debt balances if we promptly remediate the said outstanding conditions of default. Nevertheless, in accordance with IAS 1, we are required to re-classify all of the Deutsche Bank debt as short-term liabilities and continue to do so for as long as the conditions of default are not remediated.

The re-classification of Deutsche Bank debt as current liabilities, despite management's confidence that all conditions of default will be remedied during the first half of our 2014 fiscal year, raises doubts about our ability to continue as a going concern if we are called upon to settle early all of the Deutsche Bank liabilities. Despite our favourable assets impairment test and positive cash flow budget for our 2014 fiscal year, our ability to continue as a going concern may be dependent on remediation of the remaining non-financial default conditions.

As also disclosed in previous filings, we are discussing alternative financing arrangements with several parties and believe that such discussions will result in our obtaining sufficient liquidity to fund our long-term development plan, alleviate the current working capital deficit and pay out Deutsche Bank's outstanding debt. However, there is no assurance that such financing will be obtained or obtained on commercially favorable terms. Our audited consolidated financial statements for the thirteen months ended June 30, 2013, do not give effect to any adjustment which would be necessary should we be unable to continue as a going concern and, therefore, be required to realize our assets and discharge our liabilities in other than the normal course of business and at amounts different from those reflected in the audited consolidated financial statements for the thirteen months ended June 30, 2013.

Our level of indebtedness could adversely affect our business.

Although this risk could affect the our financial situation, as disclosed in Note 1 to the audited consolidated financial statements for the thirteen months ended June 30, 2013, it has been managed appropriately making possible that all amounts owing for our Forward Gold and Silver Purchase Agreements were paid on September 13, 2013. We have been discussing alternative financing arrangements with several parties.

Due to new acquisitions and our growth strategy, we may incur additional indebtedness in the future. A significant increase in our debt levels may have important consequences for us, including, but not limited to the following:

• Our ability to obtain additional financing for working capital, capital expenditures, general corporate and other purposes or to fund future operations may not be available on terms favorable to us or at all;

• A significant amount of our operating cash flow is dedicated to the payment of interest and principal on our indebtedness, thereby diminishing funds that would otherwise be available for our operations and for other purposes;

• Increasing our vulnerability to current and future adverse economic and industry conditions;

• A substantial decrease in net operating cash flows or increase in our expenses could make it more difficult for us to meet our debt service requirements, which could force us to modify our operations;

• Our leveraged capital structure may place us at a competitive disadvantage by hindering our ability to adjust rapidly to changing market conditions or by making us vulnerable to a downturn in our business or the economy in general;

• We may have to offer debt or equity securities on terms that may not be favorable to us or to our shareholders;

• Limiting our flexibility in planning for, or reacting to, changes and opportunities in our business and our industry; and

• Our level of indebtedness increases the possibility that we may be unable to generate cash sufficient to pay the principal or interest due in respect of our indebtedness.

We face many risks related to our operations that may adversely affect our cash flows and overall profitability.

Gold mining is susceptible to numerous events that may have an adverse impact on our mining business, our ability to produce gold and meet our production targets. These events include, but are not limited to:

• environmental hazards, including discharge of metals, pollutants or hazardous chemicals;

• industrial accidents;

• fires;

• labour disputes;

• mechanical breakdowns;

• electrical power interruptions;

• encountering unexpected geological formations;

• unanticipated ground conditions;

• ingresses of water;

• process water shortages;

• failure of mining pit slopes, water dams, waste stockpiles and tailings dam walls;

• legal and regulatory restrictions and changes to such restrictions;

• safety-related stoppages;

• other natural phenomena, such as floods, droughts or inclement weather conditions, potentially exacerbated by climate change.

Mineral prices can fluctuate dramatically and have a material adverse effect on our results of operations.

Our revenues are primarily derived from the sale of gold and the market price for gold fluctuates widely. These fluctuations are caused by numerous factors beyond our control including:

• speculative positions taken by investors or traders in gold;

• changes in the demand for gold as an investment;

• changes in the demand for gold used in jewelery and for other industrial uses, including as a result of prevailing economic conditions;

• changes in the supply of gold from production, disinvestment, scrap and hedging;

• financial market expectations regarding the rate of inflation;

• strength of the US dollar (the currency in which the gold price trades internationally) relative to other currencies;

• changes in interest rates;

• actual or expected sales or purchases of gold by central banks and the International Monetary Fund;

• gold hedging and de-hedging by gold producers;

• global or regional political or economic events; and

• the cost of gold production in major gold producing countries.

On October 4, 2013, the afternoon fixing price of gold on the London Bullion Market was $1,309.75 per ounce. The price of gold is often subject to sharp, short-term changes resulting from speculative activities. While the overall supply of and demand for gold can affect its market price, because of the considerable size of above-ground stocks of the metal in comparison to other commodities, these factors typically do not affect the gold price in the same manner or degree that the supply of and demand for other commodities tends to affect their market price. In addition, the recent shift in gold demand from physical demand to investment and speculative demand may exacerbate the volatility of gold prices.

A sustained period of significant gold price volatility may adversely affect our ability to evaluate the feasibility of undertaking new capital projects or continuing existing operations or to make other long-term strategic decisions. If revenue from gold sales falls below the cost of production for an extended period, we may experience losses and be forced to curtail or suspend some or all of our capital projects or existing operations. In addition, we would have to assess the economic impact of low gold prices on our ability to recover any losses that may be incurred during that period and on our ability to maintain adequate cash reserves.

We face risks related to operations in foreign countries.

Currently our properties are located in Panama, Spain and Portugal. Panama is a country with a developing mining sector but with no other commercially producing mines. Consequently, we are subject to, and our mineral exploration and mining activities may be affected in varying degrees by, certain risks associated with foreign ownership including inflation, political instability, political conditions and government regulations. Any changes in regulations or shifts in political conditions are beyond our control and may adversely affect our business. Operations may be affected by government regulations with respect to restrictions on production, restrictions on foreign exchange and repatriation, price controls, export controls, restriction of earnings distribution, taxation laws, expropriation of property, environmental legislation, water use, mine safety and renegotiation or nullification of existing concessions, licenses, permits, and contracts.

Failure to comply strictly with applicable laws, regulations and local practices relating to mineral rights applications and tenure could result in loss, reduction or expropriation of entitlements, or the imposition of additional local or foreign parties as joint venture partners with carried or other interests. The occurrence of these various factors and uncertainties cannot be accurately predicted and could have an adverse effect on our operations or profitability.

As part of our strategy to manage country risk, we continue to look to diversify our project portfolio. During fiscal 2012, a majority of our shareholders approved the acquisition of Iberian Resources Corp. ("Iberian"). Iberian owns 100% of the Lomero-Poyatos Project through its wholly-owned Spanish affiliate, Corporacion de Recursos Iberia S.L.U. The Lomero-Poyatos Project is located about 85 kilometers northeast of Seville, in the northeast part of the Iberian Pyrite Belt. Iberian also owns several other exploration licenses in Iberia through its wholly-owned Spanish and Portuguese affiliates Sulfuros Complejos Andalucia Mining S.L. and Almada Mining S.A. Pursuant to the NI 43-101 Technical Report on the Lomero-Poyatos Au-Cu-Pb-Zn Mine dated May 21, 2012, the Lomero-Poyatos Mine contains an estimated inferred mineral resource of 6.07Mt averaging 4.25 g/t of gold and 88.74 g/t of silver. The technical report was prepared by Behre Dolbear International Limited and the Qualified Person was Mr. Richard Fletcher, who is independent of us. This disclosure has been approved by Dr. Andrew Ramcharan, P.Eng., our Executive VP Corporate Development, also a Qualified Person under NI 43-101.

The requirements of the Ley Petaquilla may have an adverse impact on us.

Our operations in Panama are governed primarily by Law No. 9 of the Legislative Assembly of Panama (the “Ley Petaquilla”), a project-specific piece of legislation enacted in February 1997 to deal with the orderly development of the Cerro Petaquilla Concession.

The Ley Petaquilla granted a mineral exploration and exploitation concession to Minera Petaquilla, S.A. (formerly named Minera Petaquilla, S.A. (“MPSA”)), a Panamanian company formed in 1997 to hold the Cerro Petaquilla Concession covering approximately 136 square kilometers in north-central Panama. Although we no longer hold an interest in the copper deposits therein, we continue to hold the rights to the Molejon gold deposit and, as the Cerro Petaquilla Concession encompasses this deposit, the Ley Petaquilla governs our exploration activities.

The Ley Petaquilla contains fiscal and legal stability clauses necessary in order to obtain project financing and includes tax exemptions on income, dividends and imports. The Ley Petaquilla also provides for an increase in the annual available infrastructure tax credit, higher depreciation rates for depreciable assets which cannot be used in the infrastructure tax credit pool, and a favorable depletion allowance.

In order to maintain the Cerro Petaquilla Concession in good standing, MPSA must pay to the Government of Panama an annual rental fee of $1.00 per hectare during the first five years of the concession, $2.50 per hectare in the ninth to the tenth years of the concession and $3.50 per hectare thereafter. Initially the annual rental was approximately $13,600 payable by MPSA and funded pro rata by its shareholders. The current annual rental is approximately $34,000. The concession was granted for a 20 year term with up to two 20 year extensions permitted, subject to the requirement to begin mine development and to make a minimum investment of $400 million in the development of the Cerro Petaquilla Concession.

Under the Ley Petaquilla, MPSA was required to begin mine development by August 2001. However, MPSA was able to defer commencing development operations by one month for every month that the price of copper remained below $1.155 per pound for up to a further five years (i.e. until August 2006 at the latest). In September 2005, the multi-phase Petaquilla Mine Development Plan (the “Plan”) submitted to the Government of Panama by our Company and MPSA was approved by Ministerial Resolution. The Molejon gold mineral deposit forms part of the Cerro Petaquilla Concession and the first phase of the Plan focus on the advancement of the Molejon gold deposit by us as commenced in 2006. Subsequent phases of the Plan are the responsibility of MPSA.

The Ley Petaquilla also requires MPSA to (i) deliver an environmental report to the General Directorate of Mineral Resources of the Ministry of Commerce and Industries (“MICI”) for evaluation; (ii) submit, prior to extraction, an environmental feasibility study specific to the project area in which the respective extraction will take place; (iii) submit annually a work plan comprising the projections and approximate costs for the respective year to the MICI; (iv) post letters of credit in support of required compliance and environmental protection guarantees; (v) annually pay surface canons; (vi) annually pay royalties for extracted minerals; (vii) annually present to the MICI detailed reports covering operations and employment and training; (viii) create and participate in the administration of a scholarship fund to finance studies and training courses or professional training for the inhabitants of the communities neighboring the Cerro Petaquilla Concession in the provinces of Coclé and Colon; and (ix) maintain all mining and infrastructure works and services of the project, always complying with the standards and regulations of general application in force that pertain to occupational safety, health and construction.

For reference, a copy of Law No. 9, as passed by the Legislative Assembly of Panama on February 26, 1997, was provided with our Form 20-F for the fiscal year ended May 31, 2009, as Exhibit 4.V.

Our operations are subject to environmental and other regulation.

Our current or future operations, including development activities and commencement of production on our properties, require permits from various governmental authorities and such operations are and will be subject to laws and regulations governing prospecting, development, mining, production, exports, taxes, labor standards, occupational health, waste disposal, toxic substances, land use, environmental protection, mine safety, community services and other matters. Companies engaged in the development and operation of mines and related facilities generally experience increased costs and delays in production and other schedules as a result of the need to comply with applicable laws, regulations and permits. Other than the Molejon gold mine, there can be no assurance that approvals and permits required to commence production on our various properties will be obtained. Additional permits and studies, which may include environmental impact studies conducted before permits can be obtained, may be necessary prior to operation of the properties in which we have interests and there can be no assurance that we will be able to obtain or maintain all necessary permits that may be required to commence construction, development or operation of mining facilities at these properties on terms which enable operations to be conducted at economically justifiable costs.

Our potential mining and processing operations and exploration activities in Panama are subject to various federal and provincial laws governing land use, the protection of the environment, prospecting, development, production, exports, taxes, labor standards, occupational health, waste disposal, toxic substances, mine safety, community services and other matters. Such operations and exploration activities are also subject to substantial regulation under these laws by governmental agencies and may require that we obtain permits from various governmental agencies. We believe that we are in substantial compliance with all material laws and regulations that currently apply to corporate activities. There can be no assurance, however, that all permits which may be required for construction of mining facilities and conduct of mining operations will be obtainable on reasonable terms or that such laws and regulations would not have a material adverse effect on any mining project that we might undertake.

Failure to comply with applicable laws, regulations, and permitting requirements may result in enforcement actions there under, including orders issued by regulatory or judicial authorities causing operations to cease or be curtailed, and may include corrective measures requiring capital expenditures, installation of additional equipment, or remedial actions. Parties engaged in mining operations may be required to compensate those suffering loss or damage by reason of the mining activities and may have civil or criminal fines or penalties imposed for violations of applicable laws or regulations.

Amendments to current laws, regulations and permits governing operations and activities of mining companies, or more stringent implementation thereof, could have a material adverse impact on us and cause increases in capital expenditures or production costs or reductions in levels of production at producing properties or abandonment or delays in development of new mining properties.

To the best of our knowledge, we are currently operating in compliance with all applicable environmental regulations except as to matters under mitigation as requested by the government of Panama.

Our directors and officers may have conflicts of interest in connection with other mineral exploration and development companies.

In the event that a conflict of interest arises at a meeting of our directors, a director who has such a conflict will abstain from voting for or against the approval of such participation or such terms. In appropriate cases, we will establish a special committee of independent directors to review a matter in which several directors, or management, may have a conflict. In accordance with the laws of the Province of British Columbia, our directors are required to act honestly, in good faith and in our company’s best interests. In determining whether or not we will participate in a particular program and our interest therein, our directors primarily consider the potential benefits to us, the degree of risk to which we may be exposed and our financial position at that time. Other than as indicated, we have no other procedures or mechanisms to prevent conflicts of interest.

Environmental protestors are present in Panama.

Various independent environmental groups or individuals would like to prevent the operation of mining in Panama. Our operations could be significantly disrupted or suspended by activities such as protests or blockades that may be undertaken by such groups or individuals. Although these protests or blockades could happen, we have a contingency plan in place to ensure the continuity of our operations and activities at our Molejon mine.

Our common shares are subject to penny stock rules, which could affect trading in our shares.

Our common shares are classified as “penny stock” as defined in Rule 15g-9 promulgated under the Exchange Act. In response to perceived abuse in the penny stock market generally, the Exchange Act was amended in 1990 to add new requirements in connection with penny stocks. In connection with effecting any transaction in a penny stock, a broker or dealer must give the customer a written risk disclosure document that (a) describes the nature and level of risk in the market for penny stocks in both public offerings and secondary trading, (b) describes the broker's or dealer's duties to the customer and the rights and remedies available to such customer with respect to violations of such duties, (c) describes the dealer market, including “bid” and “ask” prices for penny stock and the significance of the spread between the bid and ask prices, (d) contains a toll-free telephone number for inquiries on disciplinary histories of brokers and dealers and (e) defines significant terms used in the disclosure document or the conduct of trading in penny stocks. In addition, the broker-dealer must provide to a penny stock customer a written monthly account statement that discloses the identity and number of shares of each penny stock held in the customer’s account and the estimated market value of such shares. The extensive disclosure and other broker-dealer compliance related to penny stocks may result in reducing the level of trading activity in the secondary market for our common shares, thus limiting the ability of our shareholders to sell their shares.

U.S. investors may not be able to enforce their civil liabilities against us or our directors, controlling persons and officers.

Our company, our officers and some of our directors are residents of countries other than the United States, and all of our assets are located outside the United States. As a result, it may not be possible for investors to effect service of process within the United States upon such persons or enforce in the United States against such persons judgments obtained in United States courts, including judgments predicated upon the civil liability provisions of United States federal securities laws or state securities laws.

We believe that a judgment of a United States court predicated solely upon civil liability under United States securities laws would probably be enforceable in Canada if the United States court in which the judgment was obtained has a basis for jurisdiction in the matter that was recognized by a Canadian court for such purposes. However, there is doubt whether an action could be brought in Canada in the first instance on the basis of liability

predicated solely upon such laws.

If we have been or are characterized as a passive foreign investment company (“PFIC”) for U.S. federal income tax purposes, our U.S. Holders may be subject to adverse U.S. federal income tax consequences.

A non-U.S. corporation generally is considered a PFIC for U.S. federal income tax purposes for any tax year if either (1) at least 75% of its gross income is passive income or (2) at least 50% of the value of its assets (based on an average of the quarterly values of the assets during a taxable year) is attributable to assets that produce or are held for the production of passive income. We have not made a determination as to whether we are considered a PFIC for the current tax year or any prior tax years.

In general, if we are a PFIC in any tax year in which a U.S. Holder (as defined in “Item 10 – Additional Information—E. Taxation—Material United States Federal Income Tax Consequences”) owns our common shares, any gain recognized on a sale by such U.S. Holder of its common shares and any “excess distributions” (as specifically defined in the U.S. Internal Revenue Code of 1986, as amended) paid to such U.S. Holder on its common shares must be ratably allocated to each day in such U.S. taxpayer’s holding period for the common shares. The amount of any such gain or excess distribution allocated to prior years of such U.S. Holder’s holding period for the common shares generally will be subject to U.S. federal income tax at the highest tax applicable to ordinary income in each such prior year, and the U.S. taxpayer will be required to pay interest on the resulting tax liability for each such prior year, calculated as if such tax liability had been due in each such prior year. For more information, see “Item 10 – Additional Information—E. Taxation—Material United States Federal Income Tax Consequences—Passive Foreign Investment Company”.

We face competition from companies with greater financial resources and operational capabilities.

The mining industry is competitive in all of its phases. We face strong competition from other mining companies in connection with the acquisition of properties producing, or capable of producing, precious and base metals. Many of these companies have greater financial resources, operational experience and technical capabilities than our company. Other companies could outbid us for potential projects or produce minerals at lower costs, which would have a negative effect on our operations. As a result of this competition, we may be unable to maintain or acquire attractive mining properties on terms we consider acceptable or at all. Consequently, our revenues, operations and financial condition could be materially adversely affected.

We may not pay dividends on our common shares in the foreseeable future.

We have paid no dividends on our common shares since incorporation and do not anticipate paying dividends in the foreseeable future. Payment of any future dividends will be at the discretion of our company’s board of directors after taking into account many factors, including our operating results, financial condition and current and anticipated cash needs.

We are a corporation organized under the laws of the Province of British Columbia, Canada. Our legal and commercial name is Petaquilla Minerals Ltd. We were incorporated on October 10, 1985, under the name Adrian Resources Ltd. by registration of our Memorandum and Articles of Association with the British Columbia Registrar of Companies pursuant to the Company Act (British Columbia) (the “BCCA”). The BCCA was replaced by the Business Corporations Act (British Columbia) (the “BCA”) in March 2004 and we are now governed by the BCA. Our name was changed from Adrian Resources Ltd. to Petaquilla Minerals Ltd. on October 12, 2004.

Our principal office is located at Suite 1230, 777 Hornby Street, Vancouver, British Columbia, Canada, V6Z 1S4. The telephone number for our principal office is (604) 694-0021 and the facsimile number is (604) 694-0063.

We have twenty-three subsidiaries as detailed below:

We are engaged in the acquisition, exploration, exploration management and sale of mineral properties, with the primary aim of developing them to a stage where they can be exploited at a profit. We are currently active in the production and sale of gold from our open pit mine at our Molejon gold project, which achieved commercial production status on January 8, 2010, as well as the exploration of a number of our adjacent mineral concessions in the Republic of Panama. On September 1, 2011, we also acquired properties in Spain and Portugal, most notably the Lomero-Poyatos mine in Andalucia, Spain, with the goal of bringing this former mine back into production and the Banjas/Poco Romano and Jales/Gralheira Projects in Porto, Portugal.

Molejon Property – Panama

Our interest in the Molejon deposit was acquired in 1992 and 1993 through two separate series of transactions and in 2005 by way of an agreement amongst the shareholders of MPSA. Specifically, in June 2005, the shareholders of MPSA agreed to separate the gold deposit and other precious metal mineral deposits that might be developed within the Cerro Petaquilla Concession from the copper mineral deposits within the concession. The agreement provided for us, through our subsidiary, Petaquilla Gold, S.A., to own a 100% interest in the Molejon gold deposit, as well as all other gold and precious metal mineral deposits that might be developed within the Cerro Petaquilla Concession, subject to a graduated 5% - 7% Net Smelter Return (currently at 7% as gold price is above $550), based on the future gold price at the time of production, payable to others.

In September 2005, the multi-phase Petaquilla Mine Development Plan (the “Plan”) submitted to the Government of Panama by us and MPSA was approved by Ministerial Resolution. The Molejon gold mineral deposit forms part of the Cerro Petaquilla Concession lands and the first phase of the Plan focused on the advancement of the Molejon gold deposit by us commencing in 2006. Subsequent phases of the Plan are the responsibility of MPSA, the joint venture company in which we no longer hold an interest.

Current Principal Capital Expenditures and Divestitures

We have either ongoing or anticipated capital expenditures during our fiscal year ending June 30, 2014. With respect to the planned exploration and advancement of our Molejon property, we anticipate capital expenditures of approximately $18,500,000 during the fiscal year ending June 30, 2014. However, such expenditures are subject to further consideration and to our ability to obtain sufficient cash flow from operations or adequate financing. There is no assurance that we will be successful in obtaining such cash flow or financing.

Public Takeover Offers

During the 13 month period ended June 30, 2013, we received a public takeover offer from a third party in respect of our shares. On September 5, 2012, Inmet Mining Corporation (“Inmet”) (now FQM (Akubra) Inc.) announced its intention to make an offer to acquire all of the outstanding common shares of our company and on September 28, 2012, Inmet filed its formal offer with Canadian securities regulators and mailed the offer and related documents to our shareholders. Under the offer, our shareholders could elect to receive compensation in cash, shares or a combination thereof, as follows:

• 0.0109 of a common share of Inmet and CAD$0.001 in cash; or

• a cash amount that is greater than CAD$0.001 but not more than CAD$0.48, and, if such elected cash amount was less than CAD$0.48, that number of common shares of Inmet equal to the excess of CAD$0.48 over the elected cash amount, divided by CAD$43.945.

On October 24, 2012, Inmet’s offer to acquire all of the common shares of our company was adjusted to:

• 0.0118 of a common share of Inmet and $0.001 in cash ; or

• a cash amount that is greater than $0.001 but not more than $0.60, and, if such elected cash amount is less than $0.60, that number of common shares of Inmet equal to the excess of $0.60 over the elected cash amount, divided by $50.82.

The offer was open for acceptance until 11:59 p.m. Pacific time on Monday, November 5, 2012, and was subject to certain conditions, including among other things, minimum acceptance of the offer by our shareholders holding at least 50.1 percent of our outstanding shares calculated on a fully-diluted basis. Upon expiry of Inmet’s offer, the minimum tender condition to acquire all of our issued and outstanding shares was not met and, accordingly, Inmet’s offer expired at such time and Inmet did not acquire any of our shares pursuant to their offer.

Molejon Property – Panama

We currently have no significant properties in Canada and we are not actively exploring, or seeking to acquire interests in, mineral properties in Canada. Our primary focus has been the exploration of the Molejon gold deposit, and, commencing January 8, 2010, the production thereof and sale of gold, and the exploration of other mineral properties in the Republic of Panama. For the year ended May 31, 2010, during which we had two production quarters, we generated revenues of $27,542,363 from our commercial production operations. Gold sold during our 2010 fiscal year totaled 24,250 ounces. For the year ended May 31, 2011, we generated revenues of $71,708,685 from our commercial production operations. Gold equivalent sold during our 2011 fiscal year totaled 54,617 ounces. For the year ended May 31, 2012, we generated revenues of $96,126,972 from our commercial production operations. Gold equivalent sold during our 2012 fiscal year totaled 62,870 ounces. For the year ended June 30, 2013, we generated revenues of $110,667,021. Gold equivalent sold during our 2013 fiscal year totaled 64,296 ounces.

The Republic of Panama, through the Ministry of Commerce and Industry, is the regulatory body overseeing the Cerro Petaquilla Concession and potential future development thereof. Law No. 9, the Ley Petaquilla, passed by the Legislative Assembly of Panama on February 26, 1997, is a project-specific piece of legislation dealing with the orderly development of the Cerro Petaquilla Concession, including the Molejon gold deposit. The Ley Petaquilla could be amended by the government of Panama through the enactment of a subsequent law but no such law has been enacted since the Ley Petaquilla legislation was adopted in February 1997. At such time, the Ley Petaquilla granted a mineral exploration and exploitation concession to MPSA, a Panamanian company which was formed in 1997 to hold the 136 square kilometer Cerro Petaquilla Concession. Our Molejon property comprises approximately 10% of the Cerro Petaquilla lands.

The Ley Petaquilla contains fiscal and legal stability clauses necessary in order to obtain project financing and includes tax exemptions on income, dividends and imports. The Ley Petaquilla also provides for an increase in the annual available infrastructure tax credit, higher depreciation rates for depreciable assets, which cannot be used in the infrastructure tax credit pool, and a favorable depletion allowance.

There were no competing bidders for the concession at the time the Ley Petaquilla was enacted and the concession was granted for an initial 20-year term with two 20-year extensions permissible subject to the requirements to begin mine development and to make a minimum required investment. In 2005, we and our former partners in MPSA delivered the Plan to the Government of Panama and the Plan was approved by Ministerial Resolution in September

2005. Development of the Molejon gold mineral deposit by us, which commenced in 2006 forms the first phase of the Plan. Subsequent phases of the Plan will be the responsibility of MPSA.

Such government approval of the Plan resulted in the extension of the land tenure for an initial 20-year period which commenced September 2005, subject to MPSA meeting certain other ongoing development and operational conditions. In addition, pursuant to the Ley Petaquilla, in order to maintain the Cerro Petaquilla Concession in good standing, we and MPSA must continue to meet certain obligations.

The Ley Petaquilla comprises the agreement between the Republic of Panama and MPSA and its affiliates and it identifies each party’s rights and obligations. The majority of our obligations require that the Republic of Panama be provided with a variety of reports, studies and work plans, payment of surface canons, access and use of port installations, evidence of bonding, etc. An example of an obligation that requires government approvals concerns the environment and states that an Environmental Feasibility Study specific to the project area in which the respective extradition will take place must be submitted to the General Direction of Mineral Resources of the Ministry of Commerce and Industries. Said study shall be evaluated and its approval, modification or rejection shall be defined within a term of 45 days counted as of the date of its presentation to the General Direction of Mineral Resources. After the end of this term, if there is no statement from the General Direction of Mineral Resources, the Environmental Feasibility Study shall be considered approved. For complete disclosure of Panama’s requirements, please refer to Law No. 9 as passed by the Legislative Assembly of Panama on February 26, 1997, or the English translation thereof, attached as Exhibits 4.V. and 4.W. to our Form 20-F for the fiscal year ended May 31, 2009.

Lomero-Poyatos Property – Spain

Following our acquisition of the Lomero-Poyatos property in September 2011, our initial focus for this property had been to attain the required environmental, technical and economic permits, which have since been approved by the Andalusian Autonomous Government, the regional government body of Andalusia, Spain. We were granted a Unified Environmental Authorization in December 2011 and all instructions and recommendations from the Andalusian Autonomous Government have since been approved and sanctioned. During our 2012 fiscal year, we also brought our technical report on the property into compliance with National Instrument 43-101. In November 2012, the titling process and finalization of mining rights for our Lomero-Poyatos project, which comprises 13 concessions totalling 176 hectares, was completed and granted to us by the Andalusian Autonomous Government, thus, enabling us to continue our work to bring the mine back into operation.

Exhibit 8 to this Transition Report on Form 20-F sets out our corporate structure and the mineral properties held by each of our subsidiaries.

With the exception of our Molejon gold project, which has reached commercial production, all of our other properties are in the exploration stage and are without a known body of commercial ore. Commercial production at the Molejon gold mine commenced January 8, 2010, when an average of 70% of design capacity was maintained continuously for a period of 30 days with metallurgical recoveries approaching forecast levels.

Mineral Concession Lands

Introduction

We brought our Molejon gold project located on the Cerro Petaquilla Concession to commercial production on January 8, 2010. We also hold the rights to 842 square kilometers of virtually unexplored land surrounding the known deposits of the Cerro Petaquilla Concession.

Property Location - Panama

Our concession lands are located approximately 120 kilometers west of Panama City and 10 kilometers from the Caribbean coast within the Donoso District of the Province of Colon in the Republic of Panama.

Figure 1
Mineral Property Location Map

The Molejon deposit is fully contained within the Petaquilla Zone 3 Concession, part of the Petaquilla Block of claims that is bound by the Petaquilla Zone 1 to the north, Petaquilla Zone 4 to the east, San Juan Zone 6 to the south, and Rio Belencillo Zone 2 to the west. Other deposits with gold mineralization identified in the area include the Botija Abajo and Brazo mineralized zones.

Figure 2
Petaquilla Concessions and Molejon Mine Location Map
Mineral Concesssions Granted by Law Number 9 (Ley Petaquilla)

Figure 3
Concession Map

Figure 4
Cerro Petaquilla Concession

Figure 5
Molejon Mine Access Map

The Cerro Petaquilla Concession is largely held by MPSA although, pursuant to the Molejon Gold Project Agreement dated June 2, 2005 (the “Molejon Gold Project Agreement”), the full text of which was filed as Exhibit 4.T. to our Annual Report on Form 20-F for the fiscal year ended May 31, 2009, we hold the rights to the Molejon gold deposit found within the concession lands as well as to other gold and precious metal mineral deposits that might be developed within Cerro Petaquilla Concession. This concession contains a large copper-gold porphyry system and our epithermal gold deposit, Molejon, amenable to open pit mining. To date, exploration has identified eight copper-gold porphyry deposits along with our Molejon gold deposit.

Our activities are focused on the Molejon gold deposit and the first phase of the Plan submitted by us and MPSA and approved by the government of Panama in 2005. In addition, we intend to perform further exploration on other identified gold targets within the Cerro Petaquilla Concession and those within our wholly-owned properties surrounding the Cerro Petaquilla Concession.

Location, Access & Physiography

The Cerro Petaquilla Concession is located 20 kilometers inland from the Caribbean coast and elevation within the concession boundaries ranges between 70 meters and 350 meters above sea level. The Cerro Petaquilla Concession falls within the rainfall shadow of the Continental Divide and the terrain is generally rugged and covered with heavy rainforest vegetation. The climate of the Cerro Petaquilla Concession is characteristic of tropical rainforests. Precipitation is high throughout the year with annual rainfall averaging at least 4,700 mm in the concession area. The heaviest precipitation is evenly distributed from May to December and the months of January to April are typically the driest months.

The Molejon gold property within the Cerro Petaquilla Concession is accessible by road or helicopter. We constructed a 28-kilometre Llano Grande–Coclesito dirt road from Coclesito, a village of approximately 700 inhabitants, to the mine site. As part of the Llano Grande-Coclesito Road Improvement Project, we also constructed two bridges to span the San Juan River. This road replaces a network of trails, which was the previous access, and the new road portion will ultimately be upgraded to rural paved status as part of ongoing development work. While the road has initially been designed to provide access to the mine site, it will ultimately comprise part of a future expansion of the national road network connecting communities with the region. Thirty kilometers of gravel road connects Coclesito with La Pintada, a town of 5,000 people on the country's paved highway network, and the Pan-American Highway to the south. This road will also be upgraded to rural paved status as part of ongoing development work.

Plant and Equipment

We constructed a gold-processing surface plant at our Molejon gold project, where ore treatment utilizes a three stage crushing plant followed by milling in three parallel ball mills. Subsequent gold recovery is done by a carbon-in-pulp leaching operation as well as a five stage carbon-in-column process. Carbon elution and electro winning of the gold is performed to produce a gold dore product that is sent for further refinement. Detoxification of the tailings is followed by storage in the site’s 40 hectare high-density polyethylene lined tailings facility.

During our 2012 fiscal year, Petaquilla Gold, S.A., our wholly-owned subsidiary which holds the rights to the Molejon deposit and which conducts our mining operations in Panama, was certified in full compliance with the International Cyanide Management Code (the “Cyanide Code”) by the International Cyanide Management Institute (“ICMI”). The ICMI was established to administer the Cyanide Code, promote its adoption, evaluate its implementation, and manage the certification process. The Cyanide Code is a voluntary industry program covering the manufacture, transport and use of cyanide in the gold mining industry.

ICMI received and accepted a Detailed Audit Findings Report prepared by an independent professional third-party auditor, who evaluated our Molejon Gold Mine against the ICMI’s Verification Protocol and found it in full compliance with the Cyanide Code’s Principles and Standards of Practice.

We remain a signatory company of the Cyanide Code.

Mine Operations

Mining at our Molejon gold project, which is divided into three principal regions namely the Northwest Zone, Tajo Abierto Zone and Main Zone, is completely open pit in nature and currently performed under contract. Current production at the pit is conducted through a combination of mechanized mining and blasting.

Mineral Recoveries

During the thirteen months ended June 30, 2013, we mined 2,446,763 tonnes of ore (May 31, 2012 – 3,217,378, May 31, 2011 – 1,670,354) with a content of 1.32 (May 31, 2012 – 1.34, May 31, 2011 – 1.60) g/t of gold, totaling 103,831 (May 31, 2012 – 138,152, May 31, 2011 – 86,161) ounces of gold before recovery. In addition, we mined a total of 3,899,408 (May 31, 2012 – 2,453,201, May 31, 2011 – 2,119,067) tonnes of waste. Total tonnes of rock mined during the thirteen months ended June 30, 2013, was 6,346,170 (May 31, 2012 – 5,670,579, May 31, 2011 – 3,789,421).

At the plant, during the thirteen months ended June 30, 2013, we milled 876,707 (May 31, 2012 – 608,984, May 31, 2011 - 694,179) tonnes of ore, with a content of 2.72 (May 31, 2012 – 3.44, May 31, 2011 – 2.86) g/t of gold. The stated capacity of the plant is 3,500 tonnes per day resulting in annual capacity of 1,277,500. Total recovery for our 2013 fiscal year was 88% and total gold produced was 67,493 (May 31, 2012 – 68,002, May 31, 2011 - 55,566) ounces.

For the thirteen months ended June 30, 2013, we produced 67,493 gold ounces (May 31, 2012 – 68,002, May 31, 2011 – 55,566 gold ounces) and sold a total of 64,296 gold equivalent ounces as compared to 62,870 and 54,617 gold equivalent ounces sold during our 2012 and 2011 fiscal years, respectively. As at June 30, 2013, we also held 142,957 (May 31, 2012 – 95,896, May 31, 2011 – 25,088) stockpiled gold ounces for our leach pad project. As part of our plan to increase gold production at our Molejon gold mine, total ounces of gold stockpiled for future heap leaching production will be processed through on/off lead pad methodology combined with a commercial heap leaching stage expected to be commissioned during calendar year 2014.

The following table reflects our production and operating results from open pit mining operations at Molejon during our 2013 fiscal year:

The following table reflects our production and operating results from open pit mining operations at Molejon during our 2012 fiscal year:

The following table reflects our production and operating results from open pit mining operations at Molejon during our 2011 fiscal year:

Cash cost per ounce of gold equivalent sold for fiscal years 2012 and 2011 has been determined as follows:

Commodity Price

During our 2013 fiscal year, gold ranged from a low of $1,192/ounce (London Fix; June 28, 2013) to a high of $1,791.75/ounce (London Fix; October 4, 2012). Our average realized gold price per ounce was $1,601 with the below charts reflecting gold prices for both the 2012 and 2013 calendar years .

Commercial production at our Molejon mine commenced on January 8, 2010, and we have, therefore, completed four fiscal years since production began. Reserve estimates and gold production data are used as the primary basis for calculation of mineral property cost depletion for the relevant years as follows:

The base estimated reserves used in the calculation were as follows:

Our mineral reserves and resources were determined using a cut-off grade of 0.1 g/t of gold, and a gold price of $1,250. For complete details of resources and reserves as at January 2011, please refer to our revised Molejon Project NI 43-101 Technical Report completed by Behre Dolbear & Company (USA), Inc. in May 2012 (effective date of September 2011).

Exploration and Advancement of the Molejon Property

During the thirteen months ended June 30, 2013, pre-stripping activities at the mine progressed and were in line with our updated mine plan. Total pre-stripping work, which has been divided into five stages, will provide access to 4,100,000 tonnes of ore representing approximately 261,000 ounces of contained gold for the simultaneous feeding of our processing plant and our on/off leach operation. As at the end of fiscal 2013, stages one through five of the pre-stripping plan had been completed. As a result, at the end of fiscal 2013, approximately 3,500,000 tonnes of ore and 213,000 contained gold ounces have been mined and partly processed or stockpiled for future production.

In addition, during the thirteen months ended June 30, 2013, we completed a production expansion plan at our Molejon Mine with the installation of a fourth ball mill to our production process, along with two additional leach tanks, two additional carbon-in-pulp tanks, one additional thickener and liner screen and doubled our ADR and electro-winning capacity. In order to support the plant’s additional capacity, our infrastructure subsidiary, Panama Desarollo de Infraestructura, S.A. commissioned a second Sandvik mobile crushing system, increasing aggregate production and in-pit crushing operations by approximately 10,000 tonnes per day.

With respect to exploration activities, during the thirteen months ended June 30, 2013, a National Instrument 43-101 101 ("NI 43-101") compliant resource and reserve estimate was completed by Behre Dolbear & Company (USA) Inc. ("Behre Dolbear") for the Botija Abajo deposit, associated with our Molejon gold operations. In addition, a NI 43-101 compliant Pit Constrained mineral inferred resource for our Palmilla deposit, located on our wholly-owned Belencillo concession and associated with our Molejon gold operations, was completed. Further, subsequent to our 2013 fiscal year, an additional NI 43-101 compliant In Pit Whittle Constrained measured, indicated and inferred resource for our Palmilla deposit was completed. Disclosure regarding these estimates can be reviewed in the Resource and Reserve Estimates section of this Transition Report on Form 20-F.

Title

Cerro Petaquilla Concession – Panama

Prior to October 18, 2006, we owned, through our indirect share ownership of MPSA, a 52% interest in the Cerro Petaquilla Concession. Specifically, our 52% ownership of MPSA was held through our then wholly-owned subsidiary of Georecursos Internacional, S.A. (“Georecursos”). On October 18, 2006, we entered into a Plan of Arrangement with Petaquilla Copper Ltd. (“Copper”), whereby we effectively transferred ownership of Georecursos to Copper and, thereby, our interest in the copper assets within the Cerro Petaquilla Concession lands to Copper.

We retain the rights to the Molejon gold deposit as well as to other gold and precious metal mineral deposits that may be developed within the Cerro Petaquilla Concession and continue to operate under the Ley Petaquilla as does MPSA.

Molejon Property - Panama

With the above noted and pursuant to the Molejon Gold Project Agreement, the shareholders of MPSA agreed to separate the gold deposit and other precious metal mineral deposits that might be developed from the copper mineral deposits within the Cerro Petaquilla Concession. Such agreement provides for us, through our subsidiary, Petaquilla Gold, S.A., to own a 100% interest in the Molejon gold deposit, as well as all other gold and precious metal mineral deposits that might be developed within the Cerro Petaquilla Concession, subject to a graduated 1% - 5% Net Smelter Return, based on the future gold price at the time of production, payable to shareholders of MPSA.

Pursuant to the contract law under which the Cerro Petaquilla Concession was granted by the government of the Republic of Panama, we with our then partners delivered the phased Plan to the government of Panama. In September 2005, the multi-phase Plan submitted to the Government of Panama by us and MPSA was approved by Ministerial Resolution. This approval resulted in the extension of the land tenure for an initial 20 year period which commenced in September 2005, subject to MPSA meeting certain other development and operational conditions on an ongoing basis. The land tenure provides for two additional 20-year terms that are also subject to MPSA meeting certain other ongoing development and operational conditions.

The Molejon gold mineral deposit, owned 100% by us, forms part of the Cerro Petaquilla Concession lands and the first phase of Plan focuses on the development of the Molejon gold deposit by us which commenced in 2006. The development of the Cerro Petaquilla copper deposit is included in subsequent phases of the Plan, and is the responsibility of MPSA.

Exploration History

Copper-gold-molybdenum porphyry mineralization was first discovered in the Petaquilla River region during a regional geological and geochemical survey by a UNDP team in 1968. The primary focus was on porphyry copper mineralization. Further exploration by several companies has since outlined three large deposits and a host of smaller ones, as well as epithermal gold mineralization. The table below summarizes the exploration history and ownership of the Petaquilla Concession and provides information about the amount of exploration carried out by each of the different companies involved in the project through the years until the discovery and development of the Molejon deposit.

Resource and Reserve Estimates

Resource estimates have been produced at Molejon through the years by different companies including:

• A study completed by SRK Consulting (Canada) Inc. on October 25, 2005

• Subsequent audit of the 2006 drill program by AAT Mining Services released on April 10, 2007

• Updated gold resource estimate by AAT Mining Services based on results obtained through September 2007

The below table shows a summary of historical resources and reserves as reported by different companies.

Colon Province, Republic of Panama
Prepared by: Behre Dolbear
Date: April 2011

We believe the above noted resource reports to be reliable and an accurate estimate of the resource at the time of their publication.

More recently, in May 2012, Behre Dolbear & Company (USA), Inc. (“Behre Dolbear”) released a report titled, “Molejon Project, NI 43-101 Technical Report, Donoso District, Colon Province, Republic of Panama” (the “May 2012 Behre Dolbear Report”), with an effective date of September 2011, in which the technical and economic analysis in the May 2012 Behre Dolbear Report was upgraded to the level required for a pre-feasibility study in order to support the establishment of mineral reserves.

Behre Dolbear determined the potential tonnes and grade of reserves in an optimized pit and generated mine plan. From this work, Behre Dolbear believes that Molejon has reserves that are economically minable. The May 2012 Behre Dolbear Report confirms 643,266 proven and probable ounces of gold reserves and 1,008,693 proven and probable ounces of silver reserves.

Highlights of the May 2012 Behre Dolbear Report are shown below:

• The Molejon deposit contains 31.6 million tonnes (Mt) of Measured plus Indicated mineral resources averaging 0.80 g/t gold and 1.74 g/t silver at a cut-off of 0.20 g/t gold.

• In addition to the gold and silver mineralization, the authors have identified 61.4 Mt of waste material within their current pit design suitable for the production of aggregate construction products.

The May 2012 Behre Dolbear Report indicates that under the current operating conditions of a 2,500tpd mill process and a 2.2Mt/yr heap leach operation, the life of mine as of January 1, 2011, was approximately 6 years which is expected to be extended by mineralized material from adjacent deposits currently being evaluated.

The Qualified Persons, who prepared the technical information in the May 2012 Behre Dolbear Report, from Behre Dolbear are Robert D. Archibald, Betty L. Gibbs, Richard S. Kunter, Michael D. Martin and Baltazar Solano-Rico. All aforementioned Qualified Persons are independent of our company.

In September 2012, Behre Dolbear released a NI43-101 report titled, “A Technical Report on the Botija Abajo Project, A Satellite Deposit of the Molejon Mine, Donoso District, Colon Province, Republic of Panama” (the “September 2012 Behre Dolbear Report”), adding additional reserves of 210,000 gold equivalent ounces to our Molejon Project.

Highlights of the Economic Analysis in the September 2012 Behre Dolbear Report

• Heap leach mine life of approximately 15 months and milling mine life of approximately six years.

• Based on metallurgical test work and design, we expect to recover and produce approximately 81,000 ounces of gold and 34.8 million pounds of copper from reserves identified in Table 2 below.

• Estimated life-of-mine capital cost of US$35.09 million, including a 30% contingency.

• After-tax net present value (NPV) of $17.46 million at a 5% discount rate generating an internal rate of return (IRR) of 21.29%.

The mineral resources in the Botija Abajo deposit are estimated to contain approximately 6.3 Mt of measured and indicated mineral resources of gold averaging 0.54 grams of gold per tonne and approximately 4.7 Mt of measured and indicated mineral resources of copper averaging 0.49% copper per tonne as set out in Table 1 below. The mineral resources stated in Table 1 below are inclusive of the mineral reserves discussed further below.

Mineral reserves for the Botija Abajo deposit were estimated from pre-feasibility level pit design work, which includes allowances for 3% mining losses and 10% dilution. The mineral reserves on the Botija Abajo deposit are estimated to contain approximately 6.7 Mt of proven and probable mineral reserves of gold averaging 0.49 grams of gold per tonne and 5.0 Mt of proven and probable mineral reserves of copper averaging 0.44% copper per tonne, so containing approximately 106,000 ounces of gold and 48.7 million pounds of copper. The reserves were estimated based on a $1,600 per troy ounce selling price for gold and a $3.54 per pound selling price for copper. The proven and probable mineral reserves in the Botija Abajo deposit are summarized in Table 2 below.

The authors of the September 2012 Behre Dolbear Report, Dr. Robert E. Cameron and Mr. Michael D. Martin of Behre Dolbear, are qualified persons and independent from our company.

In December 2012, Behre Dolbear & Company Ltd. (“Behre Dolbear & Company”) released a NI 43-101 report titled, “Technical Report on the Palmilla Gold Project, Rio Belencillo Zone 1 Concession, Colon Province, Republic of Panama” (the “December 2012 Behre Dolbear Report”), adding 502,800 gold equivalent ounces to our Molejon operation complex. The Palmilla deposit is located in our Belencillo concession and associated with our Molejon gold operations.

The NI 43-101 compliant Pit Constrained mineral inferred resource in the Palmilla deposit are estimated to contain approximately 19.7 Mt of inferred resources of gold as summarized below.

The Qualified Persons for the December 2012 Behre Dolbear Report were Messrs. Rejean Sirois and Andrew Phillips as well as Dr. Dion Brandt, all of whom are independent of our company.

In October 2013, an updated NI 43-101 compliant In Pit Whittle Constrained measured, indicated and inferred resource report for our Palmilla deposit was completed. In Pit Whittle Constrained mineral resources in the Palmilla deposit are estimated using a cutoff grade of 0.35 g/t AuEq as shown in Table A below:

Gold equivalent was calculated using Au, Cu and Ag prices and recoveries. Drill hole samples from 2012 were analyzed by ALS Chemex of North Vancouver, BC. Historical project drill hole samples were analyzed by TSL Laboratories of Saskatoon, SK.

The Qualified Person for this October 2013 report was Mr. Yann Camus, Eng., of SGS Canada Inc., and he is independent of our company.

Regional and Local Geology

Panama is underlain by an island arc built upon late Cretaceous oceanic crust and is considered prospective for porphyry copper-gold-molybdenum deposits.

Andesitic tuffs and flows of presumed early to middle Tertiary age cover the majority of the Cerro Petaquilla Concession lying at the southern limit of a 400 square kilometer batholith, dated at 32.6+2 million years, which has intruded the older volcanic sequence. The core of the batholith is composed of quartz monzonite, grading outward to granodiorite and porphyritic granodiorite. The Petaquilla and Botija deposits are centered on porphyritic stocks and dykes lying peripheral to the southern margin of the batholith.

At the Botija deposit, the intrusive is medium-grained, crowded porphyry composed of 25% plagioclase phenocrysts, 15% hornblende phenocrysts and 5-10% quartz grains in a feldspar rich matrix. At the Petaquilla deposit, the intrusive is more obviously porphyritic, with a generally lower percentage of phenocrysts. Contact phases and dykes at each deposit are finer-grained varieties of the main intrusive. In particular, feldspar, hornblende, quartz porphyry dykes appear to be late stage phases of the granodiorite. Most of these porphyry dykes post-date the mineralization, indicating that they were introduced during the waning stages of hydrothermal alteration and mineralization. The youngest units encountered on the property are the unmineralized basalt and andesite dykes.

Copper-gold-molybdenum porphyry deposits have been identified and partially delineated at the Petaquilla and Botija deposits, which are centred four kilometres apart on an east-west trend within the Cerro Petaquilla Concession. Four types of well-developed alteration have been observed within the various intrusive units: potassic, phyllic, quartz-chloritic and propylitic. Potassic alteration is found near the core of the porphyry system and is not extensive. It is characterized by quartz, potassium feldspar, biotite, sericite and lesser amounts of anhydrite and magnetite. The majority of copper mineralization is hosted in the phyllic altered rock, which is composed of quartz and sericite with minor kaolinite and K-spar. Propylitic alteration, marked by chlorite, pyrite, calcite and epidote, marks the outer extent of alteration in a porphyry system. The phyllic and quartz-chlonite alteration zones are usually found between the potassic core and the peripheral propylitic zone, although either may be missing. Alteration of the andesitic volcanic units, characterized by prograde biotite hornfels and fine grained sulphide mineralization occurs when they are found to be proximal to the intrusive contact or within zones of intrusive dyking.

The Petaquilla deposit is largely hosted by porphyritic granodiorite below its intrusive contact with andesite forming a flat-lying to gently dipping sheet, trending east-west and dipping to the north. It has been drilled for 1,600 metres along strike and remains open along strike to the south, east and west and at depth.

The Valle Grande deposit is hosted dominantly by prophyritic granodiorite and, similar to the Petaquilla deposit, is a flat-lying sheet, trending northwest-southeast and dipping to the north. It has been drilled for 2,400 meters along

strike and is considered to have limited expansion potential.

The Botija deposit trends east-west and dips 20-30 degrees to the north or northeast. It has been intersected by drilling along strike for 1,800 metres and up to 600 metres down dip. The Botija deposit remains open near the surface to the south, along strike to the east and the west, and in many places at depth both vertically and down dip to the north.

The general geology of the Molejon epithermal gold target is dominated by volcanic and subvolcanic intrusives, including massive andesite flows, feldspar-porphyritic andesite flows, andesitic tuffs and andesitic agglomerates. This volcanic package has been intruded by feldspar-quartz porphyry and feldspar porphyry units. A northeast trending fault is believed to be the major structural control for the emplacement of the hydrothermally altered quartz-carbonate breccia.

Mineralization

Mineralization at the nearby Petaquilla, Valle Grande and Botija deposits is largely concentrated within potassic or phyllic altered porphyritic intrusives of granodioritic composition. Volcanic-hosted copper mineralization, associated with strong biotite alteration, is widespread at the Petaquilla deposit and contributes significantly to its tonnage. Mineralization in each deposit consists of chalcopyrite and pyrite as disseminations, within quartz veinlets and filling brittle, irregular fractures. Pyrite content generally decreases with higher grade copper mineralization and increases towards the periphery of the deposits. Chalcopyrite occurs most commonly as very fine disseminations within an altered intrusive matrix or biotite hornfels. It is often associated with magnetite and/or chlorite or biotite altered mafic minerals, most notably in lower-grade sections of propylitic alteration. Stockwork quartz veinlets are best developed within potassic alteration, where they crosscut pervasive silicification. The irregular fracture-filling style of copper mineralization, which locally approaches a sulphide net, is largely confined to biotite-altered andesite at the Petaquilla deposit. This is cut in places by narrow quartz-chalcopyrite veins which have developed bleached selvages of biotite destruction. A fourth style of mineralization, consisting of chalcopyrite and pyrite coatings along steep, widely spaced cooling joints are confined to granodiorite along the eastern periphery of the Botija deposit.

Molybdenite is present mainly in quartz, carbonate, chalcopyrite veinlets hosted by granodiorite within the most intensely altered and mineralized portion of each deposit. Bornite occurs locally with chalcopyrite and contributes significantly to the copper grade in some sections, mainly within hornfelsed andesites in the Petaquilla deposit. Although leaching is widespread throughout the upper 10 to 30 metres of the deposits, supergene copper mineralization is not present in significant amounts. Magnetite is an important accessory in both deposits, disseminated throughout both the porphyritic intrusives and the intruded andesite.

At our Molejon deposit, epithermal gold-silver mineralization occurs within structurally controlled zones of hydrothermal quartz-carbonate breccia and the fractured and altered rocks marginal to the quartz-carbonate breccia. Assay boundaries of gold-silver mineralization are not sharply constrained by geological contacts. Highest grade mineralization usually occurs in the quartz-carbonate breccia but economic mineralization also occurs in feldspar-quartz porphyry, and more rarely in feldspar-porphyritic andesite flows.

Doing Business in Panama

The following briefly summarizes our understanding of the economic and political climate in Panama based on research and information compiled by us from various sources that we believe to be reliable.

With five successive elected civilian governments, the Central American nation of Panama has made notable political and economic progress since the 1989 U.S. military intervention that ousted the regime of General Manuel Noriega from power. Current President Ricardo Martinelli of the center-right Democratic Change (CD) party was elected in May 2009, defeating the ruling center-left Democratic Revolutionary Party (PRD) in a landslide. Martinelli was inaugurated to a five-year term on July 1, 2009. Martinelli’s Alliance for Change coalition also captured a majority of seats in Panama’s National Assembly. Panama’s service-based economy has been booming in recent years, largely because of the ongoing Panama Canal expansion project (slated for completion in 2014), but economic growth slowed in 2009 because of the global financial crisis and U.S. economic recession. Nevertheless, the economy rebounded in 2010 and 2011, with growth rates approaching 7% and 10%, respectively.

In his last year in office, the president, Ricardo Martinelli, will focus on upgrade of transport and logistics

infrastructure, which forms part of plans to upgrade Panama into a regional hub. Leading indicators confirm that the economy is slowing from double-digit rates, but it will still grow by an average of 7% in 2013-14.

We note the risk assessment ratings for Panama by The Economist Intelligence Unit are in the mid-range, as shown below.

Sovereign risk - Creditworthiness is supported by an established system of dollarisation and a manageable public debt/GDP ratio—estimated at 39% of GDP currently—although this excludes contingent liabilities related to turn-key public-works projects amounting to over $2 billion. The government ran a fiscal deficit equivalent to 2% of full-year GDP in the first half of 2013, and GDP growth is slowing from double digit-rates, but economic performance remains supportive.

Currency risk - Strong foreign direct investment inflows related to a raft of public and private capital projects support currency risk.

Banking sector risk - Low levels of non-performing loans, together with high capitalisation and liquidity levels, underpin the outlook for the banking sector.

Political risk - Speculation that the president, Ricardo Martinelli, may seek a way around the current bar on consecutive re-election is sustaining political uncertainty as campaigning for the May 2014 presidential election gets underway.

Economic structure risk - Panama’s reliance on services exports and a small local productive base creates some external vulnerabilities.

Mining has not historically been a significant factor in the Panamanian economy and, consequently, Panama does not have the infrastructure and trained personnel required for modern mining operations. The government of Panama has, however, included the development of mineral resources in its economic plan to diversify the

Panamanian economy and has taken steps to put in place the legislative framework needed to foster development of these resources.

The Code of Mineral Resources of the Republic of Panama has been subject to substantial modifications, among which the most important are Law No. 3 of January 28, 1988, and Law No. 32 of February 9, 1996. The main purpose of such amendments was to simplify the procedure for filing the necessary petitions to obtain concessions, either for conducting mining exploration or mining extraction operations and property rights over the minerals extracted. These amendments grant total exemption from import taxes and customs duties for all equipment, spare parts and materials used in the development of any type of mining operations and there are no export taxes on mineral production.

During fiscal year 2012, through Law No. 13 of April 3, 2012, the Government of Panama made an amendment to the Code of Mineral Resources of the Republic of Panama. The main purpose of this amendment was to not allow foreign governments or any foreign official entity to hold any mining concession within the territory of Panama and to increase the royalty rate on the value received for all minerals of higher commercial value (e.g. gold and silver) mined from a concession, from 2% to 4% to be paid to the government of Panama. In order for this increase to be applied to the Company however, the Government must first modify Law No. 9, which remains unchanged as of the date of the financial statements for the year ended May 31, 2012.

The holder of an exploration concession has the exclusive right to obtain an exploitation concession for the subject area upon determining that the minerals covered by the concession may be produced in commercial quantities through a separate request to the Government of Panama.

Exploitation concessions generally permit the holder to carry out additional pre-development exploration, to construct all necessary production facilities and to extract, process, store, transport, market and export the minerals subject to the concession so long as production is ongoing.

In 1995, the Panamanian Tax Reform Law was enacted to simplify the corporate income tax rates applicable to income earned in Panama (Law No. 28 of June 20, 1995). Since June 1995, the corporate income tax rate has been 30%. In addition to corporate income tax, Panamanian law provides for a dividend tax. With the exceptions provided for in the Fiscal Code of the Republic of Panama, all corporations must retain 10% of the amounts they may distribute among their shareholders as dividends or share quotas. In case dividends are not distributed, or the entire amount distributed as dividend or share quota is less than 40% of the net profit of that fiscal period, minus taxes paid by the corporation, the corporation must cover 10% of the remainder.

The Fiscal Code of the Republic of Panama indicates certain expenses which may be deducted from the income tax, applicable to companies conducting mining activities. Additionally, the Code of Mineral Resources establishes certain expenses related to such activities that may be deducted from income tax as well.

There are currently no significant restrictions on repatriation from Panama of earnings to foreign entities other than the income tax and the dividends tax referred to above. There are currently no material currency exchange or foreign investment restrictions.

Based on our understanding of current Panamanian environmental laws and regulations, we do not anticipate that such laws will have an adverse material impact on the operations we may conduct in the future. Based on geochemical analysis and reporting, we anticipate that our Molejon gold project will meet or exceed the effluent and leachate requirements of Panamanian environmental laws and regulations. We use a carbon-in-pulp (“CIP”) floatation process, which allows in process cyanide destruction before effluent is discharged. Any acidity produced at the experimental pH is expected to be buffered by the receiving waters around the Molejon project, which have a pH between 7.4 and 7.8 and total alkalinity between 15 mg/L and 27 mg/L (as CaCO3). Results for both tails and waste rock leachate indicate that the Molejon project will have net acid neutralizing potential. The results of the continuous tests showed that the INCO SO2 cyanide destruction method is an efficient process for decreasing the total cyanide concentrations in our CIP leach pulp.

The foregoing laws of general application apply to our Panamanian mineral properties other than the Cerro Petaquilla Concession which is governed primarily by the Ley Petaquilla. Please refer to “Item 4 - Information on Our Company - B. Business Overview”.

Panama's currency, the Balboa, is at parity with the U.S. dollar. Exchange transactions are allowed in U.S. dollars

and, as a result, foreign currency fluctuations may be material for us to the extent that fluctuations between the Canadian and U.S. dollar are material.

Property Location – Spain

Our Lomero-Poyatos project is located at 37°48’N / 6°56’W in Huelva Province of the Autonomous Community of Andalucia in Southern Spain, about 500 kilometers south of Madrid, 85 kilometers north-west of Seville, and 60 kilometers north-east of the port of Huelva, in the northeast part of the Iberian Pyrite Belt.

Figure 14
Lomero-Poyatos Project Location

Figure 15
Lomero-Poyatos Concession Area (covers 56 hectares and with underground rights comprising 175.6 hectares)

Summary of Exploration History and Ownership

Our subsidiary, Corporacion Recursos Iberia S.LU.. acquired an interest in the historic Lomero-Poyatos mine from the previous owner, Recursos Metalicos SL (RMSL) and commissioned Behre Dolbear International Limited to prepare a preliminary geological model and mineral resource estimate of the Lomero-Poyatos deposit based on available historic data. It is this work that forms the basis for our present NI 43-101 report on Lomero-Poyatos.

Much of the historical data, including most of the drill-hole data, was generated by Cambridge Mineral Resource plc (CMR), a company that previously owned the property during the period 2001-2007.

The Lomero-Poyatos mine produced about 2.6 Mt of pyrite ore, mostly by underground mining methods, for use as sulphuric acid feedstock, but has been closed for about 20 years. The site consists of a sealed vertical shaft and headgear that would need refurbishing, the Lomero open-pit mine to the east of the shaft and the Poyatos open pit mine to the west of the shaft.

Since our acquisition of the Lomero-Poyatos mine in September 2011, we obtained the required environmental, technical and economic permits, a Unified Environmental Authorization, and brought our brought our technical report on the property into compliance with National Instrument 43-101 during our 2012 fiscal year. During our 2013 fiscal year, the titling process and finalization of mining rights for our Lomero-Poyatos project was completed and granted to us by the Andalusian Autonomous Government, thus, enabling us to continue our work to bring the mine back into operation. We, subsequently, engaged in a drilling campaign of over 20,000 metres, completed a twin drill program to upgrade the existing NI 43-101 resource estimate from inferred mineral resources to a measured and indicated basis, prepared for dewatering the mine including conditioning the 300-metre deep Renato Tap, advanced towards a NI 43-101 compliant feasibility study through resource upgrade work, constructed a project office building, improved project internal roads, infrastructure and communications channels, adopted personal protection measures in preparation for the initiation of mining activities, and implemented key environmental protection measures, including the protection of native flora and fauna. In order to access the galleries to commence a bulk sampling program and a drilling program, we commenced construction of a mine access ramp, which will permit access to the first ore chamber from where we will continue to other stopes.

Figure 16
Ramp Construction

Figure 17
Drilling

Figure 18
Review of Core Samples

Resource and Reserve Estimates

In May 2012, Behre Dolbear International Limited (“Behre Dolbear International”), produced its report titled, “NI 43-101 Technical Report on the Lomero-Poyatos Au-Cu-Pb-Zn Mine in Andalusia, Spain” to update its report originally issued July 29, 2011. According to this report, the Lomero-Poyatos deposit, with the application of potential underground mining constraints, is estimated to have Inferred Mineral Resource of 6.07 Mt averaging 4.25 g/t of gold, 88.74 g/t of silver, containing 0.83 Moz Au, after the application of a minimum drill-hole intersection of 2m at 1 g/t Au. The estimate accounts for the mined out area and it assumes an average SG of 4.5 at a 1 g/t Au cut-off. The deposit also contains some minor copper, lead and zinc values but, due to increased precious metal prices, the Lomero-Poyatos deposit is considered primarily as a gold project with base-metal by-products.

The Lomero-Poyatos deposit is at the exploration stage and the mineral resource estimate is based on relatively wide-spaced drilling. It is recommended that a drilling programme comprising 20,000 metres of HQ drill core be carried out to provide true width intersections through the mineralized zone. The Phase 1 drill results should provide a regular 50m x 100m drill spacing that should be sufficient to upgrade the Inferred Mineral Resource estimate to the Indicated Resource category. It is proposed that a scoping study then be completed. Phase 2, a standard Pre-feasibility Study, will be contingent on the successful completion of and positive result from the Phase 1 Scoping Study. This study should include work to explore the economic viability of an open pit operation of lower-grade near surface mineralization. Phase 2 should include another 20,000 metres of in-fill drilling that should be sufficient to upgrade the Mineral Resource estimate to the Measured Mineral Resource category. Due to the uncertainty that may be attached to Inferred Mineral Resources, it cannot be assumed that all or any part of an Inferred Mineral Resource will be upgraded to an Indicated or Measured Mineral Resources as a result of continued exploration.

Behre Dolbear International also believes that we should continue to examine the economic viability of open pit operations of the lower-grade near-surface mineralization as previous studies of the deposit were completed at much lower metal pricing than is currently achievable. This could potentially expand the defined mineral resources at the property if these studies should show that this portion of the in-situ mineralization, which is currently excluded from the estimated mineral resource, could possibly become economically extractable.

The Qualified Person, who prepared the technical information in the Lomero-Poyatos report, from Behre Dolbear International, is Richard Fletcher and he is independent from our company.

Geology and Mineralization

The Lomero-Poyatos mine is located in the north-east part of the Spanish/Portuguese (Iberian) pyrite belt, which extends about 230 kilometers between Seville, southern Spain, in the east to the Atlantic coast near Lisbon, Portugal, in the west. Lomero-Poyatos is a poly-metallic, massive-sulphide deposit that is located on the northern limb of the San Telmo anticline, which is an E-W trending fold structure adjacent to a major thrust fault. The deposit has an ENE (0.75°) strike and dips about 35° N.

At the surface there are two separate areas of mineralization – Lomero (east) and Poyatos (west) – that combine at depth to form a single deposit 900 metres in strike length. The average thickness of massive sulphide exceeds 20 metres. The mineralization is known to extend at least 500 metres down dip.

The mineral assemblage consists of pyrite, tenantite, sphalerite, galena, chalcopyrite, minor arsenopyrite, barite, pyrhotite and gold. There are some hematite-magnetite-rich bands.

Outlook 2014

For our locations in Panama during our 2014 fiscal year, we are focusing on continuing and increasing gold production at our Molejon gold project, and the continued exploration on our Oro Del Norte, Botija Abajo and Palmilla deposits. We are currently conducting additional testworks to expand our resource base and to upgrade the mineral resources at Palmilla to the mineral reserve category, and analyzing the potential exploration upside at the Palmilla deposit to add to our mine life at Molejon.

With respect to the planned exploration and advancement of our Molejon property, we anticipate capital expenditures of approximately $23,500,000 during the fiscal year ending June 30, 2014. All such expenditures are subject to further consideration and our ability to obtain sufficient cash flow from operations or adequate financing.

We are actively pursuing financing options in order to fund our long-term development plan, re-finance short-term liabilities, and terminate our existing gold and silver prepayment contracts and convertible loan. It would be our intention to use net proceeds from financing(s) to fund capital expenditures related to our Molejon mine in Panama and our Lomero-Poyatos mine in Spain, terminate our obligations under existing prepaid forward mineral contracts, repay a portion of existing indebtedness, and provide for general corporate purposes. However, there is no assurance that we will be successful in obtaining such financing.

While we maintain our plans for the future spin-out of Panama Desarrollo de Infraestructuras, S.A., our infrastructure division, we will assess all alternatives to best allocate our capital taking into account the short to medium term volatility of gold prices and the potential of our infrastructure division's new aggregate business. Any such spin-out would be subject to regulatory and shareholder approval.

During the fiscal year ending June 30, 2014. Panama Desarrollo de Infraestructuras, S.A. will continue to focus on providing aggregate and screened rock material to MPSA in accordance with the aggregates and screened rock purchase subcontract signed during our 2013 fiscal year. Pursuant to the subcontract, MPSA has an option to purchase up to $100,000,000 of aggregate and screened rock, with a minimum guaranteed amount of $75,000,000, subject to our providing such materials within a three year period. Sales of aggregates during the thirteen months ended June 30, 2013, totaled $6.1 million.

None.

We are in the business of the acquisition and exploration of mineral properties, with the primary aim of developing them to a stage where they can be exploited at a profit. At that stage, our operations would, to a significant extent, be dependent on the prevailing market prices for any of the minerals produced by such operations. We currently have one gold producing mine in Panama.

During the year ended June 30, 2013, we were primarily engaged in gold production at our Molejon property in Panama since bringing the Molejon gold project to commercial production on January 8, 2010. Our future mineral exploration and mining activities may be affected in varying degrees by Panama's political stability and government regulation, all of which are beyond our control. Please refer to "Item 3 - Key Information – 3.D. Risk Factors”.

Thirteen Months Ended June 31, 2013, Compared to Year Ended May 31, 2012 (prepared in accordance with IFRS)

For our 2013 fiscal year, our consolidated financial statements have been prepared in accordance with IFRS issued by the IASB and all amounts are expressed in United States dollars unless otherwise indicated. Our operating results reflect ongoing administrative costs, net of interest and other income, revenue from the sale of gold, production and operating expenses and amortization and depletion.

Operating Margin

During the thirteen months ended June 30, 2013, our operating margin was $36.0 million compared to $34.9 million obtained during fiscal 2012. This increase of 3% in the operating margin was due to the following reasons:

• Revenues and production costs

During the thirteen months ended June 30, 2013, gold sold totaled 63,111 ounces, corresponding to an increase of 3% compared to year ended May 31, 2012 (61,259 ounces). Total revenues (see Note 20 to the audited consolidated financial statements for the thirteen months ended June 30, 2013) and production costs were $110.7 million and $52.9 million, respectively, corresponding to an average sales price of $1,601 and a cash cost per ounce sold of $569. Total revenues for the thirteen months ended June 30, 2013, increased by 15% compared to year ended May 31, 2012, due to the above mentioned 3% increase in gold ounces sold, an increase of 393% and 337% in sales of aggregates and construction contracts of our infrastructure subsidiary, respectively, offset by a decrease of 2% in the average sales price.

Production costs for the thirteen months ended June 30, 2013, increased by 15% compared to year ended May 31, 2012, due mainly to the increase in our infrastructure subsidiary’s business and the waiver of royalties agreed to between us and Inmet Mining Corporation as described in Note 16 to our audited consolidated financial statements for the thirteen months ended June 30, 2013. As a consequence of the 3% increase in ounces of gold sold during the thirteen months ended June 30, 2013, compared to year ended May 31, 2012, and the increase in revenue coming from infrastructure business combined with the mentioned decrease in costs of royalties, cash costs per ounce of gold sold at $569, for the thirteen months ended June 30, 2013, decreased by 2% compared to the year ended May 31, 2012 ($584).

• Depreciation and depletion

Depreciation of production equipment and depletion of mineral properties was $21.7 million for the thirteen months ended June 30, 2013, compared to $15.3 million for the year ended May 31, 2012. The increase by 42% was related to additional depreciation recorded in the last quarter of the thirteen months ended June 30, 2013, due to the measurement of our infrastructure subsidiary’s operations upon de-classification as held-for-distribution to owners. See Note 8 to the audited consolidated financial statements for the thirteen months ended June 30, 2013.

Earnings from operations

During the thirteen months ended June 30, 2013, earnings from operations of $1.3 million decreased by 85% compared to the year ended May 31, 2012, mainly due to an increase of 32% in expenses offset by an increase of 3% in operating margin. The mentioned increase in expenses was largely due to:

• An increase of $3.2 million in general and administrative expenses mainly due to an increase of $1.6 million in accounting and legal fees, $0.4 million in office administration, $0.8 million in travel expenses and $0.5 million in wages and salaries. Main reasons for these higher expenses are connected with the increase of activities in Spain related to the processes of obtaining environmental, technical and economic permits and completion of the titling process for our Lomero-Poyatos project.

• An increase of $4 million in donations and community relations mainly due to the agreement signed by us with the Government of Panama for construction of water management facilities for the benefit of communities around our Molejon mine. We have committed to spending a total amount of $4.1 million by June 30, 2014.

• An increase of $1.2 million in exploration and evaluation costs due to the increase of activities in Spain related to our Lomero-Poyatos project.

Net income (loss)

Net income for the thirteen months ended June 30, 2013, decreased by 121% to a net loss of $4.6 million compared to an income of $22.4 million for the year ended May 31, 2012. Following is a variance analysis showing the main reasons for this decrease:

• A decrease of $10.1 million in the mark-to-market gain on share purchase warrants

• During the thirteen months ended June 30, 2013, we incurred $3.5 million in respect of obtaining advice in defending a hostile takeover bid by and reaching an alternative agreement with Inmet (Note 16 to the audited consolidated financial statements for the thirteen months ended June 30, 2013). In addition, during the same period, we recognized approximately $1.8 million of costs in relation to our ensuing financing arrangements.

• $12.2 million of non-cash loss adjustment during the thirteen months ended June 30, 2013, derived from the valuation at fair value of the forward mineral purchase agreements and the convertible loan with Deutsche Bank

• A gain on waiver of accrued royalties in amount of $13.3 million (see Notes 16 and 22 to the audited consolidated financial statements for the thirteen months ended June 30, 2013).

Cash Flow

Operating Activities

Cash flow generated from operations during the thirteen months ended June 30, 2013, at $12.6 million, decreased by 47% compared to $23.7 million for the year ended May 31, 2012.

The decrease in cash flow generated from operations is attributable mainly to the increase in working capital needs to achieve the higher volume to be mined at our Molejon mine in connection with low grade ore to be processed through a commercial stage of heap leaching projected to start up in calendar 2014, and aggregates material that has been sailing since March 2013 within the terms of the agreement signed with Minera Panama, S.A. worth up to $100 million. In addition during the thirteen months ended June 30, 2013, there was not any closing of new forward purchase agreements with financial institutions like in comparison with fiscal years 2012 and 2011, when two mineral forward commercial agreements were signed for a total amount of $56 million.

Financing Activities

There was a net cash inflow of $6.6 million from financing activities during the thirteen months ended June 30, 2013, compared to a net cash outflow of $1.2 million during the year ended May 31, 2012.

The increase of $7.8 million in cash provided by financing activities during the thirteen months ended June 30, 2013, was mainly due to the increase of $6.8 million in the proceeds from new bank loans, in connection with the expansion of the Molejon Gold Plant in Panama and working capital requirements.

Investing Activities

There was a net cash outflow of $17.6 million for the thirteen months ended June 30, 2013, compared to a net cash outflow of $24.4 million for the year ended May 31, 2012. The decrease of $6.8 million in the cash used for investing activities during the thirteen months ended June 30, 2013, was mainly due to a lower expenditure in mineral properties, plant and equipment.

Year Ended May 31, 2012, Compared to Year Ended May 31, 2011

For our 2012 fiscal year, our consolidated financial statements have been prepared in accordance with IFRS issued by the IASB and all amounts are expressed in United States dollars unless otherwise indicated. Our operating results reflect ongoing administrative costs, net of interest and other income, revenue from the sale of gold, production and operating expenses and amortization and depletion.

Operating Margin

During the year ended May 31, 2012 operating margin was $34.9 million compared to $20 million obtained during fiscal 2011. This improvement of 74% in the operating margin was due to the following reasons:

• Gold sales and production costs

During the year ended May 31, 2012, gold equivalent sales totaled 62,870 ounces, corresponding to an increase of 15% compared with the same period of fiscal 2011 (54,616 ounces). Gold sales and production costs were $94.3 million and $44.1 million (2011 - $71.7 million and $39.2 million), respectively, corresponding to an average sales price of $1,640 and cash cost per ounce sold of $574. These figures represent an increase of 22% in average sales price compared to the same period of previous fiscal 2011 ($1,348) and a decrease of 8% in average cash cost per ounce sold for the same period ($625).

• Depreciation and depletion

Depreciation of production equipment and depletion of mineral properties was $15.3 million for the year ended May 31, 2012 compared to $12.5 million for the same period of fiscal 2011. The increase by 22% was mainly due to the acquisition of new equipment for Molejon Gold Mine and PDI Panama and in addition to the 22% increase in gold produced that originated a higher depletion charge of the mineral properties compared to the same period of fiscal 2011.

Earnings (loss) from Operations

During the year ended May 31, 2012, Earnings from Operations at $8.7 million increased by 238% compared to the same period of fiscal 2011, mainly due to a 74% increase in Operating Margin and due to a 1% decrease in expenses. The mentioned decrease in expenses was largely due to:

• A decrease of $2.5 million in other operating expenses related to professional fees in connection with the Forward Gold Purchase Agreement signed with Deutsche Bank in fiscal year 2011.

The mentioned decrease was offset by:

• An increase of $4.1 million in general and administrative expenses. General and administrative expenses were $14.2 million for the year ended May 31, 2012 compared to $10.1 million for the same period of fiscal 2011. This increase was mainly due to an increase of $0.9 million in accounting and legal fees, $0.5 million in investor relationship activities, $1.1 million in wages & benefits and $0.9 million in office administration expenditures.

Net income (loss)

Net income for the year ended May 31, 2012 increased by 683% to $22.4 million compared to a net loss of $(3.8) million for the same period of fiscal 2011. Following is a variance analysis showing the main reasons for this increase:

(*) The increase in other non-operating income (expenses) during the year ended May 31, 2012 was mainly due to the decrease of $10.7 million in the mark to market valuation of warrants denominated in other currencies than United State Dollars and the decrease of $5.0 million in the mark to market valuation of the secured notes and convertible secured notes of the Company. In Note 21 to the Consolidated Financial Statements a breakdown of Other non-operating income (expenses) account has been disclosed.

Year Ended May 31, 2011, Compared to Year Ended May 31, 2010 (both originally prepared in accordance with generally accepted accounting principles in Canada)

For our 2011 fiscal year, our consolidated financial statements were originally prepared in accordance with generally accepted accounting principles in Canada and all amounts are expressed in United States dollars unless otherwise indicated. Our operating results reflect ongoing administrative costs, net of interest and other income, revenue from the sale of gold, production and operating expenses and amortization and depletion.

During fiscal year 2011 revenue of $71,708,685 increased by 160% compared to $27,542,363 during previous fiscal year 2010. The specific reasons and factors contributing to the material change in revenues between fiscal year 2011 and 2010 were as follows: During fiscal year 2011 the quantity of gold sold increased by 122% compared to previous fiscal year 2010. During fiscal year 2011, we sold 53,865 ounces of gold compared to 24,250 ounces of gold for fiscal year 2010.

This material increase in the total quantity of gold sold during fiscal year 2011 compared to fiscal year 2010, was due to commercial production at Molejon Project started during January 2010, and for this reason, fiscal year 2010

considers only five months of commercial production within its revenues. Fiscal year 2011 considered a complete fiscal year of twelve months of revenue.

Regarding the average realized gold price, during fiscal year 2011 we obtained an average of $1,348 compared to an average of $1,115 during fiscal 2010.

During fiscal year 2011 cost of sales of $39,157,086 increased by 141% compared to $16,237,588 during previous fiscal year 2010. This material increase in the total cost of sales was mainly due to the increase of the total ounces of gold sold during fiscal year 2011 compared to fiscal year 2010 due to twelve months of commercial production in 2011 versus five months in 2010.

Amortization of production equipment and depletion of mineral properties were $(11,335,717) for the year ended May 31, 2011, compared to $(4,839,420) for the year ended May 31, 2010. During the pre-operating period, which ceased on January 8, 2010, amortization of production equipment was capitalized to mineral properties up until the start of commercial production on January 8, 2010. Depletion of mineral resources commenced on the date of commercial production and is being charged over the life of the mine using the unit-of-production method.

During the year ended May 31, 2011, other income increased by $18,451,666 to $1,909,919 compared to $(16,541,747) for the year ended May 31, 2010. The increase in other income is largely due to a decrease in the mark-to-market loss on convertible and senior secured notes of $10,066,219. The mark-to-market loss on convertible and senior secured notes was $(6,023,189) for the year ended May 31, 2011, compared to $(16,089,408) for the year ended May 31, 2010. There was also a decrease of $196,571 in interest on long-term debt. Interest on long-term debt was $(305,003) for the year ended May 31, 2011, compared to $(501,574) for the year ended May 31, 2010. The decrease in interest on long-term debt is due to the termination of some capital leases during the year ended May 31, 2011. Other income was also impacted by an increase of $3,153,394 in deferred services. During the year ended May 31, 2011, the agreement for deferred services between us and Minera Panama, S.A. expired, and as a consequence of this termination and subsequent to our receipt of a legal opinion of counsel, the outstanding balance regarding the obligation derived from this contract was recorded as other income. There was also an increase of $5,243,309 in gain on disposal and dilution derived from the disposal of Vintage Mining Corp. by Azuero Mining Development, S.A.

Expenses for the year ended May 31, 2011, increased by $7,650,281 to $(24,555,971) compared to $(16,905,690) for the year ended May 31, 2010. The increase in expenses is primarily due to an increase of $2,473,358 in transaction fees on our forward gold sale agreement. Transaction fees on our forward gold sale agreement were $2,473,358 for the year ended May 31, 2011, compared to $Nil for the year ended May 31, 2010. This increase was due to the costs associated with our Deutsche Bank Forward Gold Purchase Agreement, which were expensed in accordance with our accounting policy. There was also an increase of $4,965,003 in exploration and development costs. Exploration and development costs were $9,269,306 for the year ended May 31, 2011, compared to $4,304,303 for the year ended May 31, 2010. This increase was due to the increased exploration activity on our Oro del Norte property, located near our Molejon Project. We also incurred an increase in donations and community relations of $170,961. Donations and community relations for the year ended May 31, 2011, were $1,411,440 compared to $1,240,479 for the year ended May 31, 2010. This increase was due to our commitment to fund Fundacion Petaquilla, which promotes a sustainable development culture and administers social programs in the area around our Molejon property. Office administration expenses increased $811,497. Office administration costs were $2,421,243 for the year ended May 31, 2011, compared to $1,609,746 for the year ended May 31, 2010. This increase was primarily due to the increased activity in our subsidiaries of Petaquilla Gold and Panama Desarrollo De Infraestructuras, S.A. over 2010 requiring additional administrative support. Consulting fees were $983,667 for the year ended May 31, 2011, compared to $663,796 for the year ended May 31, 2010. This increase is mainly due to the engagement of consultants for our projects to transition to International Financial Reporting Standards for our 2012 fiscal year and to optimize processes at our Molejon mine. Lastly, investor relations and shareholder information expenses increased $340,623. Investor relations and shareholder information expenses were $843,313 for the year ended May 31, 2011, compared to $502,690 for the year ended May 31, 2010. This increase is mainly due to filing fees related to our private placement in our 2011 fiscal year and to an increase in investor relationship activities during the year ended May 31, 2011.

Our increase in expenses was partially offset by a decrease in stock based compensation expenses of $379,898. Stock based compensation expenses were $971,208 for the year ended May 31, 2011, compared to $1,351,106 for the year ended May 31, 2010. The decrease was due to a lower amount of stock options issued during fiscal year 2011. Travel expenses also decreased $249,373. Travel expenses were $657,616 for the year ended May 31, 2011, compared to $906,989 for the year ended May 31, 2010. Travel expenses were higher in the prior year due to a significant number of Shareholder and board activities. There was also a decrease in debt issuance costs of

$613,244. Debt issuance costs were $Nil for the year ended May 31, 2011, compared to $613,244 for the year ended May 31, 2010. This reduction corresponds to our reduction in debt. Accounting and legal expenses decreased by $119,678. Accounting and legal expenses totaled $1,655,679 for the year ended May 31, 2011, compared to $1,775,357 for the year ended May 31, 2010.

The net loss and comprehensive loss for the year ended May 31, 2011, was $(3,937,326) or $(0.03) per basic and diluted share compared to a net loss and comprehensive loss of $(26,982,082) or $(0.25) per basic and diluted share for the year ended May 31, 2010.

June 30, 2013, Compared to May 31, 2012

During the thirteen months ended June 30, 2013, gold equivalent sold at 64,296 ounces increased by 2% compared to fiscal 2012. In addition, operating margin for the thirteen months ended June 30, 2013, increased by 3% compared to fiscal 2012 mainly due to an increase in revenues by 15% offset by an increase of 15% in production costs.

During the four months ended June 30, 2013, we and Inmet Mining Corporation (“Inmet”) signed and executed a new contract for the sale of aggregates worth up to $100 million. During the last quarter of the thirteen months ended June 30, 2013, the sales of aggregates increased by 254% compared to same period of fiscal 2012.

Working capital is defined as current assets less current liabilities and provides a measure of our ability to settle liabilities due within one year. As at June 30, 2013, our working capital deficiency at $85.6 million, increased by 105% compared to May 31, 2012. The main reason for this increase has been described in Note 1 to the audited consolidated financial statements for the thirteen months ended June 30, 2013.

Our total assets as of June 30, 2013, increased by 17% compared to those at the end of fiscal 2012, while our total liabilities as of June 30, 2013 increased by 26% compared to May 31, 2012. As at June 30, 2013, our equity was at $53.3 million, representing a 5% decrease compared to the end of fiscal year 2012. This decrease is mainly derived from the net comprehensive loss for the thirteen months ended June 30, 2013, in amount of $4.6 million.

As it has been disclosed in Note 1 to the audited consolidated financial statements for the thirteen months ended June 30, 2013, we are in default of our Forward Gold Purchase Agreement (Note 17 to the audited consolidated financial statements for the thirteen months ended June 30, 2013) as we failed to meet our delivery requirements for December 2012 and June 2013. All amounts owing for these failed delivery requirements were paid on September 13, 2013. The default persists as of the date of the consolidated financial statements for all agreements with Deutsche Bank as certain other reporting covenants continue to not be met. As a result of the default, all amounts owing to Deutsche Bank have been classified as current liabilities as required under IAS 1. This factor indicates the existence of a material uncertainty that raises substantial doubt about our ability to continue as a going concern. We have been discussing alternative financing arrangements with several parties. However, there can be no assurance that such financing will be obtained or obtained on commercially favourable terms. The consolidated financial statements for the thirteen months ended June 30, 2013, do not give effect to any adjustment which would be necessary should we be unable to continue as a going concern and therefore, be required to realize our assets and discharge our liabilities in other than the normal course of business at amounts different from those reflected in the consolidated financial statements.

May 31, 2012, Compared with May 31, 2011

During the year ended May 31, 2012 gold equivalent production at 69,503 ounces represented an increase of 23% compared to fiscal 2011; meanwhile gold equivalent sold at 62,870 ounces represented an increase of 15% compared to the same period. Although this improvement in production and sales increased the level of revenue and profits of our company by 32% and 683%, respectively, and generated a positive cash flow from operations of $21.9 million, the capital requirements for different projects, like the expansion of the capacity of Molejon Gold Plant, the pre-stripping activities, the on/off leach operation, and the acquisition of Iberian Resources Corp., produced the application of the positive cash flow derived from operations. Although these capital requirements, as of the end of fiscal 2012 cash position at $12 million stayed at similar levels as at the end of fiscal 2011, showing the ability of our company to increase production, continue developing the Molejon Mine and increasing its production capacity, using both sources of capital, cash flow from operations and financing.

During the fourth quarter of fiscal 2012, we entered into two new transactions with Deutsche Bank. On February 24, 2012, we entered into a convertible non-revolving term loan agreement for proceeds of CAD$6,000,000. On the same date, we entered into a Forward Silver Purchase Agreement in amount of $11,300,000 (see Notes 15 and 17, respectively, to the Consolidated Financial Statements for the year ended on May 31, 2012).

Working capital is defined as current assets less current liabilities and provides a measure of a company’s ability to settle liabilities due within one year. Although there was a 75% increase in the working capital deficiency during fiscal 2012, we managed this increase in the deficiency in its working capital needs through short term financing borrowed from financial institutions in Panama and long term financing entered with Deutsche Bank as mentioned above.

Our total assets as of May 31, 2012, increased by 45% compared to those at the end of fiscal 2011, while total liabilities of our company as of May 31, 2012, increased by 10% compared to May 31, 2011. As at May 31, 2012, the Company’s equity was at $55.9 million, 438% higher than that as at the end of fiscal year 2011. This increase is derived from the acquisition of Iberian Resources Corp (see Note 11 to the audited consolidated financial statements for the year ended May 31, 2012) as well as the net income of $22.4 million earned during the year ended May 31, 2012.

Net cash flow from operations during the year ended May 31, 2012, amounted to $21.9 million. This compares to a net cash outflow from operations of $0.9 million during fiscal 2011, before considering the inflow in amount of $45 million from the presale of gold in accordance with the forward gold purchase agreement signed with Deutsche Bank during the year ended May 31, 2011.

As of May 31, 2012, we accumulated a deficit of $(122,969,497) (May 31, 2011 - $(148,563,397)). However, during the year ended May 31, 2012, we earned a net income of $22.4 million. This represents an increase in net income of $26.2 million compared to the net loss of $(3.8) million for the year ended May 31, 2011. This significant improvement was derived mainly from an increase of $14.9 million in the operating margin, a decrease of $0.2 million in our expenses, an increase in finance expense of $1.6 million and an increase in non-operating income (expenses) of $12.7 million.

The increase in finance expense is derived mainly from the financing related to the acquisition of heavy mining equipment by PDI through leases obligations and the expansion capacity of the Molejon Plant by Petaquilla Gold, S.A., both Panamanian subsidiaries.

Our operating cash flow and profitability are affected by various factors, including the amount of gold produced and sold, the market price of gold, operating costs, interest rates, environmental costs, the level of exploration activity, labour risk, the risk of business disruption due to environmentalist activities and political risk. We seek to manage the risks associated with our business; however, many of the factors affecting these risks are beyond our control.

Our management believes that based on our company’s planned fiscal 2013 projections, including the expected growth in gold prices, we have sufficient cash flow to operate for the next twelve months.

May 31, 2011, Compared with June 1, 2010

As at May 31, 2011, our financial situation improved significantly as compared to June 1, 2010. Cash on hand plus short and long term investments increased by $1,287,143 to $5,912,792 at May 31, 2011, compared to $4,625,649 as at June 1, 2010. This represents an increase of 28% in our cash position . In addition, our liquidity ratio as at May 31, 2011, improved significantly compared to June 1, 2010, resulting in a reduction in working capital deficiency of $65,767,949. As at May 31, 2011, our working capital deficit was $23,848,920 compared to $89,616,869 as at June 1, 2010, representing a reduction of 73% in our working capital deficiency. Working capital is defined as current assets less current liabilities and provides a measure of our ability to settle liabilities that are due within one year with assets that are also expected to be converted to cash within one year.

Our total liabilities as at May 31, 2011, increased by $2,830,424 to $118,334,905 compared to $115,504,481 as at June 1, 2010. This represents a 2.5% increase in our obligations. Further, as at May 31, 2011, our total assets increased $38,475,213 to $128,733,415, compared to $90,258,202 as at June 1, 2010, representing a 43% increase. Shareholders’ equity (deficiency), as at May 31, 2011, increased 141% to $10,398,510 compared to a shareholders’ equity (deficiency) of $(25,246,279) as at June 1, 2010. This significant improvement in terms of equity was due to the

completion of our private placement offering and the exercise of warrants and options during the year ended May 31, 2011, partially offset by the net comprehensive loss of $3,393,944 for the year ended May 31, 2011.

As at May 31, 2011, we had $3,124,437 outstanding in secured notes (“Notes”) and $3,970,105 outstanding in convertible secured notes (“Convertible Notes”). The Notes bore interest at an annual rate of 15% and had maturity dates five years from the dates of issuance (May 21, 2008, July 9, 2008, and October 3, 2008) with a 20% premium on principal to be paid at maturity. The Convertible Notes bore interest at an annual rate of 15% and were originally written to mature two years from the date of issuance (March 25, 2009) at 110% of the principal.

On February 8, 2011, we redeemed 12,008 Notes at 120% of their principal value plus interest for a total payment of $12,008,345 and 18,347 Convertible Notes at 110% of their principal value plus interest for a total payment of $18,347,276. These payments were financed by the private placement completed during the year ended May 31, 2011. On December 30, 2010, January 7, 2011, January 26, 2011, and January 31, 2011, we issued a total of 32,000,000 common shares at a price of CAD$1.00 per shares, raising gross proceeds of CAD$32,000,000.

Our operating cash flow and profitability are affected by various factors, including the amount of gold produced and sold, the market price of gold, operating costs, interest rates, environmental costs, the level of exploration activity, labor risk, the risk of business disruption due to environmentalist activities and political risk. We seek to manage the risks associated with our business; however, many of the factors affecting these risks are beyond our control.

We do not undertake any research or development activities. Please refer to prior Item 5.A. and Item 5.B for a discussion of our exploration expenditures incurred in connection with the exploration of our mineral properties.

Commercial production at our Molejon gold mine commenced January 8, 2010, when an average of 70% of design capacity was maintained continuously for a period of 30 days with metallurgical recoveries approaching forecast levels. The following table provides production numbers for our two production quarters in fiscal 2010 (combined) as well as each quarter in fiscals 2011, 2012 and 2013:

The above reflects a stable trend in gold production and a decreasing trend in cash cost per ounce of gold sold on an annual basis. Over the past few years, generally unstable global economic conditions, especially in the United States and Europe, have driven an increased global demand for gold.

The monthly average gold price during our 2013 fiscal year equaled $1,603.86, a decrease from $1,666.00 from the period covered by our 2012 fiscal year.

We do not have any off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that are material to investors.

Further, pursuant to the Forward Gold Purchase Agreement effected August 17, 2010, as amended on September 23, 2010, we have an obligation to Deutsche Bank AG, London Branch, to provide them with a specified number of ounces of gold in the future. The following table summarizes our future gold delivery requirements on an annual basis:

Pursuant to the Forward Silver Purchase Agreement effected February 24, 2012, as amended on March 14, 2012, we

have an obligation to Deutsche Bank AG, London Branch, to provide them with a specified number of ounces of silver in the future. The following table summarizes our future silver delivery requirements on an annual basis:

Long-Term Debt

Bank Loans

On June 11, 2013, we, through our subsidiary Petaquilla Gold, S.A., entered into a $4 million bank loan with MetroBank, S.A. The loan accrues interest at 7.50% per annum and is repayable within 180 days. This loan was repaid in its entirety subsequent to our year end (Note 33).

During the thirteen months ended June 30, 2013, we, through our subsidiary Panama Desarrollo de Infraestructuras, S.A., entered into two separate loan arrangements with Global Bank of Panama for a total amount of $0.7 million. The loans earn interest at 6% per annum and are repayable within three years. Total principal and interest payments amount to $0.09 million and $0.02 million, respectively during the year. As at June 30, 2013, the outstanding obligation relating to these loans is $0.61 million.

During the year ended May 31, 2012, we, through our subsidiary Petaquilla Gold, S.A., entered into a working capital credit facility with Lafise Bank of Panama for an amount up to $2 million. This credit facility accrues interest of 7.75% per annum and the term of each loan within the credit facility is 180 days. During the thirteen months ended June 30, 2013, the Company renewed all such loans and entered into an additional credit facility with

Lafise Bank of Panama for $0.95 million under the same terms. As of June 30, 2013, the outstanding obligation relating to these facilities is $2.95 million (May 31, 2012 - $2 million).

On September 1, 2011, Banco Bilbao Vizcaya Argentaria (Panama), S.A. approved a Credit Line Facility in the amount of $6.9 million. This facility was used for the acquisition of heavy equipment by our subsidiary, Petaquilla Gold, S.A. in connection with the expansion of our production capacity at our Molejon Gold Mine. This credit facility accrues interest at the LIBOR rate plus a spread of 3.75%, with a minimum of 6.50%. The equipment serves as collateral throughout the term of the facility (four years) and is registered with the Public Registry of the Republic of Panama. As of June 30, 2013, the outstanding obligation relating to this facility is $6.2 million (May 31, 2012 - $2.3 million).

During the year ended May 31, 2011, we arranged with Global Bank of Panama, a bank loan financing of $2.3 million for the payment of advances to suppliers of heavy equipment for our subsidiary Panama Desarrollo de Infraestructuras, S.A. Total principal and interest payments on this loan for the thirteen months ended June 30, 2013, amount to $0.5 million and $0.1 million, respectively (year ended May 31, 2012, $0.4 million and $0.1 million, respectively). This facility accrues interest at 6% per annum and is collateralized by a $2.3 million cash term deposit that earns interest at 5% per annum, and has an expiration date longer than one year to secure this arrangement. As of June 30, 2013, the outstanding obligation relating to this facility is $1.4 million (May 31, 2012 - $1.8 million).

During the year ended May 31, 2011, we entered into a $25,520, 8% bank loan for the purchase of vehicles which was repaid during the thirteen months ended June 30, 2013. Balance outstanding as of May 31, 2012, was $16,964.

During the year ended May 31, 2010, we entered into a $115,700, 10% annual interest bank loan for the purchase of vehicles which was repaid during the thirteen months ended June 30, 2013. Balance outstanding as of May 31, 2012 was $42,320.

Bank loans include overdraft balances at certain banks of $907,360 as at June 30, 2013 (May 31, 2012 - $nil).

Finance Lease Obligations

During the year ended May 31, 2011, we, through our subsidiary Panama Desarrollo de Infraestructuras, S.A., entered into two finance leases through a Credit Line Leasing Facility with Global Bank of Panama for a total value of $4.8 million. The leases accrue interest of 6.25% per annum for a period of five years to maturity. Total principal and interest payments on these leases for the thirteen months ended June 30, 2013, amounted to $1 million and $0.23 million, respectively. At June 30, 2013, the outstanding obligation relating to these finance leases is $2.8 million (May 31, 2012 - $3.8 million).

During the year ended May 31, 2012, we, through our subsidiary Panama Desarrollo de Infraestructuras, S.A., entered into five finance leases through a Credit Line Leasing Facility with Global Bank of Panama for a total value of $5 million. The leases accrue interest of 6.25% per annum for a period of five years to maturity. Total principal and interest payments on these leases for the thirteen months ended June 30, 2013, amount to $1 million and $0.27 million. At June 30, 2013, the outstanding obligation relating to these finance leases is $3.4 million (May 31, 2012 - $4.4 million). As a condition of the leases, the equipment serves as collateral throughout the term of the lease and is registered with the Public Registry of the Republic of Panama.

Also during the year ended May 31, 2012, we, through our subsidiaries, Petaquilla Gold, S.A. and Panama Desarrollo de Infraestructuras, S.A., entered into six finance lease arrangements with Caterpillar Credito, S.A. de C.V. Sucursal Panama ("Caterpillar Financial") for a total value of $4.5 million ($1.4 million and $3.1 million, respectively). These leases accrue interest of 6% per annum for a period of five years to maturity. Total principal and interest payments on these leases for the thirteen months ended June 30, 2013, amount to $0.7 million ($0.22 million from Petaquilla Gold, S.A. and $0.48 million, from Panama Desarrollo de Infraestructuras, S.A.) and $0.19 million ($0.05 million from Petaquilla Gold, S.A. and $0.14 million from Panama Desarrollo de Infraestructuras, S.A.) respectively. At June 30, 2013, the outstanding obligation relating to these finance leases is $2.7 million ($0.8 million from Petaquilla Gold, S.A. and $1.9 million from Panama Desarrollo de Infraestructuras, S.A.) (May 31, 2012 - $3.4 million ($1 million from Petaquilla Gold, S.A. and $2.4 million from Panama Desarrollo de Infraestructuras, S.A.)).

During the thirteen months ended June 30, 2013, we, through our subsidiary Panama Desarrollo de Infraestructuras,

S.A., entered into further four finance lease arrangements with Lafise Bank of Panama, Global Bank of Panama, MultiBank of Panama, and Caterpillar Financial for $1.1 million, $0.8 million, $0.66 million and $2.1 million, respectively. The leases with Lafise Bank of Panama and MultiBank of Panama accrue interest of 7.00% per annum for a period of three and four years respectively, the lease with Global Bank of Panama accrues interest at 6.25% for a period of five years, while the lease with Caterpillar Financial accrues interest at 6.00% per annum for a period of five years. Total principal and interest payments on these leases for the thirteen months ended June 30, 2013, amounted of $0.4 million and $0.1 million, respectively. At June 30, 2013, the outstanding obligation relating to these finance leases with Lafise Bank of Panama, Global Bank of Panama, MultiBank of Panama, and Caterpillar Financial is $0.81 million, $0.69 million, $0.65 million, and $2.1 million respectively.

During the thirteen months ended June 30, 2013, the deposits set up for equipment purchases (May 31, 2012 - $4,997,526) have been transferred to mineral properties, plant and equipment and inventory on completion of the plant expansion project at the Company’s Molejon mine.

Convertible Loan

On February 24, 2012, we entered into a convertible non-revolving term loan agreement (“the Convertible Loan”) with Deutsche Bank AG, London Branch (“Deutsche Bank”) for proceeds of CAD$6,000,000. We paid Deutsche Bank a loan structuring fee (“Structuring Fee”) of CAD$90,000 ($90,635) and received net proceeds of CAD$5,910,000 on March 14, 2012. The Convertible Loan bears interest at an annual rate of 6.35% and matures on February 24, 2016. At the option of the lender, the Convertible Loan can be converted into our common shares at a conversion per share of CAD$0.6121, which was calculated based on the five-day volume weighted average share price of our common shares on March 14, 2012.

As the Convertible Loan is denominated in Canadian dollars, we are required to issue a variable number of our common shares upon conversion of the Convertible Loan by Deutsche Bank. In accordance with IAS 32, the conversion option is considered to be a derivative and recorded at fair value. The fair value of the conversion option was determined to be $2,911,885 on initial recognition, using Black Scholes option pricing model. The fair value of the derivative is revalued at the end of each reporting period and is determined to be $nil on June 30, 2013 (May 31, 2012 - $2,044,932). The fair value of the conversion option was derived from using the Black Scholes option pricing model with the following assumptions:

The gain resulting from the change in fair value of the derivative of $2,044,932 (May 31, 2012 - $866,963) has been included in our statement of operations and comprehensive income (loss).

The Structuring Fee was allocated to the loan and the conversion feature based on their relative fair values on initial recognition. A total of $43,679 of the costs attributable to the conversion option was included within Finance expenses in our statement of operations and comprehensive income for the year ended May 31, 2012.

$3,083,455 of the proceeds was attributed to the Convertible Loan upon initial recognition.

We are in default of our Gold Agreement (Note 14) as we failed to meet our delivery requirements for December 2012 and June 2013. All amounts owing for the failed delivery requirements were paid on September 13, 2013. The default persists as of the date of these consolidated financial statements for all agreements with Deutsche Bank, including the Convertible Loan.

Given the event of default, the loan was classified as a current liability. The amortized cost was therefore accreted to its face value of $5,704,506 (CAD$6,000,000). Accretion expense incurred during the thirteen months ended June 30, 2013, was $2,749,563 (May 31, 2012 - $176,144; May 31, 2011 - $nil).

The Convertible Loan is guaranteed, on a joint and several basis, by all of our assets and the assets of our

subsidiaries.

Community Support Obligation

We have an arrangement to make future community support payments and have recognized a liability for the present value of the estimated future payments and corresponding accretion expense due to the passage of time using the following assumptions:

During the thirteen months ended June 30, 2013, we entered into an agreement with the Government of Panama for construction of water management facilities for the benefit of communities around our Molejon mine. We have committed to spending a total amount of $4,053,346 by June 30, 2014. The provision has been accrued as donations and community relations expense during the thirteen months ended June 30, 2013. As at June 30, 2013, $200,000 has been spent for the obligation.

Land Lease Agreement

On February 24, 2013, the we and Inmet signed a binding term sheet outlining the agreement of the companies relating to aggregate procurement, land access and use, settlement of certain claims, waiver of royalties to be received by Inmet relating to the Company’s sales from its Molejon mine, and camp site procurement in the District of Donoso, Panama.

In accordance with the term sheet, Inmet leases certain lands owned by us for establishment of temporary and permanent camp space for Inmet’s Cobre Panama project for an annual rent of $1.3 million. On February 28, 2013, we received a payment from Inmet in relation to this land lease of $13 million, comprising rent for a 10 year period. During the thirteen months ended June 30, 2013, rental income of $433,333 has been recognized in our statement of operations and included within non-operating income (expenses).

Also in conjunction with the term sheet, Inmet has waived its right over 5% royalties from our sales at our Molejon mine, in accordance with a previous agreement. The waiver resulted in a gain of $13,348,341within non-operating income (expenses) in our statement of operations and comprehensive income (loss).

Provision for Closure and Reclamation

Our provision for closure and reclamation relates to site restoration and clean-up costs for our operating Molejon mine located in Panama. The present value of the obligations relating to the operating mine is currently estimated at $12,997,029 at June 30, 2013 (May 31, 2012 - $11,062,579), which reflects payments that are expected to be made mainly between fiscal 2017 and fiscal 2019.

The undiscounted value of this liability, the inflation adjusted cash flow required to settle this obligation, is approximately $13.8 million at June 30, 2013 (May 31, 2012 – approximately $12 million). An inflation rate assumption of 1.84% has been used to estimate future costs (May 31, 2012 – 1.96%). A discount rate of 1.41% (May 31, 2012– 1.31%) was used in determining present value at June 30, 2013. Accretion expense of $158,029 has been charged to the consolidated statement of operations for the thirteen months ended June 30, 2013 (May 31, 2012 - $212,375) to reflect an increase in the carrying amount of the obligations.

A reconciliation of the provision for closure and reclamation is as follows:

The safe harbour provided in Section 27A of the Securities Act and Section 21E of the Exchange Act (“statutory safe harbours”) apply to forward-looking information provided pursuant to Item 5.E. and Item 5.F. above.

The following information regarding our directors and members of senior management, including names, business experience, offices held and outside principal business activities, are at June 30, 2013:

Cristobal Colon de Carvajal

Mr. Cristobal Colon de Carvajal (born October 4, 1949) was appointed to our Board of Directors on January 18, 2012, after having served on our Advisory Board. Formerly, he served as Executive Vice Chairman of Ocaso, the second largest privately-held insurance company in Spain, overseeing matters of insurance, loans and other financings. Mr. Colon de Carvajal also served with distinction as an officer, helicopter pilot, and naval commander in the Spanish Navy and holds several awards in Spain and abroad, including a medal bestowed by the Republic of Poland for sacrifice and courage. He has been recognized for various activities in different regions of the world and has been honoured with appointments such as Special Mission Ambassador, whereby he has represented Spain at events held in Latin America and the Caribbean. Like his ancestor, Cristobal Colon (Christopher Columbus), Mr. Colon de Carvajal holds the titles of Duke of Veragua, Duke de la Vega, Marquis of Jamaica, and Admiral of the Ocean Sea, among others.

Rodrigo Esquivel

Mr. Rodrigo Esquivel (born July 5, 1963) was appointed our President on September 1, 2010. Mr. Esquivel is a lawyer with over 20 years of professional practice in Panama. He is a partner in and founder of Esquivel, Fernandez & Associates. Formerly he held such positions as Executive Vice President of Exploraciones Geotecnologicas, S.A., Director and General Manager of Forestal Nacional, S.A., Advisor to the Panamanian Ministry of Finance and Treasury, Deputy Director General of Income Tax (IRS), Director of the Fiscal Lottery, Legal Adviser of the Ministry of Health, Vice Minister of Health, Deputy Director of Social Security and Executive Director of the Water Supply Institute.

Raul Ferrer

Mr. Raul Ferrer (born January 8, 1973) was appointed to our board of directors (the “Board of Directors”) on November 6, 2009. Mr. Ferrer is a leading financial advisor to a number of businesses operating in Panama. He is a former financial investments director with the Panamanian equity investment firm, Wall Street Securities.

Richard Fifer

Mr. Richard Fifer (born January 23, 1957) is a Panamanian citizen and a U.S.-trained geologist. He has served on our Board of Directors from March 1993 to November 1998, July 2002 to July 2003, and from November 12, 2003, to the present and as our Executive Chairman of the Board of Directors from September 1, 2010, to the present. In addition, he served as our Chief Executive Officer from December 14, 2004, to March 23, 2005, and from April 14, 2007, to September 15, 2009. In 2006, he co-founded Petaquilla Copper Ltd and served as its Chief Executive Officer until the company was sold in 2008. Under the Ministry of Foreign Affairs Panama, he served as Plenipotentiary Ambassador for Special Missions of the Republic of Panama from March 2002 to September 2003. He also served as Governor of the Province of Cocle, Panama, and as National Security Advisor to the Republic of Panama from September 1999 to January 2002. He is a former Chairman and President of Corporación de Desarrollo Minero (Codemin), Panama's state mining company. Since 1994, he has been President of Geoinfo, S.A., a Panamanian company that provides geographic mapping technology and solutions. Mr. Fifer holds degrees in Geology from the University of Utah, in Geophysical Engineering Studies from Rice University and in Advanced Finance Studies from Tulane University. He is a geologist by training.

David Kaplan

Mr. David Kaplan (born April 28, 1970) was appointed to our Board of Directors on November 6, 2009, and as our Corporate Secretary on December 22, 2009. He has served on the Board of Directors of Coronet Metals Inc., a mineral exploration firm, since June 1, 2011. He is presently co-head of Lascaux Resource Capital, an asset management company focused on metals and mining. He is a former key member of LIM Advisors LLC, a multi-strategy investment group, where he managed a portfolio of metal and energy futures and securities for a commodity hedge fund. He is a also a former Vice-President of Gerald Metals Inc., financial analyst and trader with Glencore Ltd., and graduate of the Wharton School of the University of Pennsylvania.

Pedro Pablo Permuy

Mr. Pedro Pablo Permuy (born November 18, 1964) was appointed to our Board of Directors on January 18, 2012. He presently also serves as President of the United States-Spain Council, an organization in which U.S. and Spanish corporate leaders, top government officials and leaders in education and culture promote stronger ties – through bilateral trade and investment, business opportunities in both countries, annual forums where business and government leaders explore key policy and economic matters affecting commerce, and fostering educational and cultural programs - between the two countries. Formerly, he held the positions of Senior Vice President -Government Relations and Communications of the ABSi Corporation, Director of Governmental Affairs at Greenberg Traurig, LLP and Deputy Assistant Secretary of Defense for Inter-American Affairs.

Joao Manuel

Mr. Joao Manuel (born November 6, 1952) was appointed our Chief Executive Officer on November 6, 2009, after having served as our Chief Operating Officer since December 1, 2008. He also served as our President from November 6, 2009, until September 1, 2010. Before joining us, Mr. Manuel held the position of Chief Financial Officer of Copper, which was also a reporting issuer listed on the Toronto Stock Exchange. Mr. Manuel has over 20 years of management experience in large, multinational corporations worldwide, including General Electric Company, ITT Europe Ltd. and Nokia Consumer Electronics. He is a former Managing Director of Inapa France S.A. and Chief Financial Officer and Deputy Chief Executive Officer of the Inapa Group, Europe’s fourth largest paper merchant with operations in eight countries.

Ezequiel Sirotinsky

Mr. Ezequiel Sirotinsky (born November 24, 1971), a Certified Public Accountant, was appointed our Chief Financial Officer on November 29, 2010. Mr. Sirotinsky was formerly Director of Finance for Silver Standard Resources, Inc., where he was responsible for the administration and finance aspects of their Mina Pirquitas Project in Argentina, and Administrative and Finance Manager for AngloGold Ashanti Limited’s Cerro Vanguardia Project, a gold and silver mine, where, among other responsibilities, he was involved in reporting and accounting management, treasury and cash management, risk management, business planning and strategy development, and tax planning.

Lázaro Rodriguez

Mr. Lázaro Rodriguez (born March 9, 1971) was appointed our Chief Operating Officer on April 8, 2010, after having served as our Vice President of Security (2007) and Vice President of Operations (2008-2010). Prior to joining us, Mr. Rodriguez was president and general manager of a physical security company and director and general manager of a voice, data, and video wireless network implementation company, both in Panama. He has also served as an external advisor to the National Council for Public Security and National Defense (Panama) responsible for strategy in the areas of public safety and maritime security. This followed Mr. Rodriguez’s position as Commander of the Special Operations Unit in Panama’s National Maritime Service, where he was responsible for the planning, development and execution of rescue operations, anti-drug trafficking campaigns and research.

Andrew J. Ramcharan

Dr. Andrew J. Ramcharan (born March 29, 1972) was appointed our Executive Vice President – Corporate Development on May 7, 2012. He was formerly with IAMGOLD Corporation as Manager – Corporate Development (M&A), with SRK Consulting as Manager Technical Services, and with Resource Capital Funds as a geological / mining analyst. Dr. Ramcharan is a graduate of the Colorado School of Mines, the University of Loeben, and Harvard University’s Continuing Education program. He is a Professional Engineer, a Qualified Person and an expert on National Instrument 43-101 with his Ph D. thesis on global reporting codes.

No family relationships exist between our directors and members of senior management. We have no arrangements or understandings with any major shareholder, customer, supplier or other, pursuant to which any such individual has been selected as a director or member of senior management.

During the thirteen months ended June 30, 2013, we paid cash compensation to our directors and officers as described below. No other funds were set aside or accrued by us during the thirteen months ended June 30, 2013, to provide pension, retirement or similar benefits for our directors or officers pursuant to any existing plan provided or contributed to by us or our subsidiaries under applicable Canadian laws. We are required, under applicable securities legislation in Canada, to disclose to our shareholders details of compensation paid to our directors and executive officers. The following fairly reflects all material information regarding compensation paid to our directors and executive officers and disclosed to our shareholders under applicable Canadian law.